Aditya Birla Group further strengthened its global position as the largest player in the fibre business by acquiring Domsjö Fabriker, a leading Swedish speciality pulp and bio-refinery company, through its two South East Asian fibre making arms Thai Rayon Public Company Limited (Thailand) and Indo Bharat Rayon (Indonesia), for $ 340 million(Rs 1,500 crore) from a Swedish consortium.
The group that has been active in buying out assets and companies in various fields of commodities has already sewn deals aggregating over $1.4 billion since January 1.
The buyout of Domsjö Fabriker will supplement its raw material requirement for producing viscose staple fibre(VSF) and will give greater control over its feed cost as pulp prices are surging in line with upward tick for most commodities.
The diversified business group that is specially strong in the commodities space, already has capacity to produce 0.75 million tonnes of VSF a year and is in the process of raising it by a third by 2013. It needs to secure feedstock to better control its cost heads.
Domsjö is in the process of expanding capacity from 210,000 tonnes to 255,000 tonnes per annum by 2012, which will further enhance in-house feedstock for the group’s VSF business.
Speciality pulp produced by Domsjö finds primary use in the textile segment (viscose staple fibre and viscose filament yarn). Around a quarter of the production is used in premium applications, such as binding agents for medical products, particularly pharmaceutical tablets and in casings (wraps) for the food industry.
In addition, bio-refinery enables the company to extract the full value from its operations by the production of ethanol and lignosulphate as by-products. Ethanol obtained from its bio-refinery is used in bio fuel, paint and printing sectors. Lignosulphate, is used as an additive in concrete, ceramics and dye pigments, among others.
The transaction involves the groups two Asian arms including the Thai-stock exchange listed firm to bring in over half of the money with the rest being raised through a special purpose vehicle. The Aditya Birla Group was advised by Sweden-based investment bank ABG Sundal Collier for the transaction, which shows how Indian business groups are not restricting their global acquisitions to the niche club of top I-bankers as they hunt for new assets.
Kumar Mangalam Birla, chairman of the Aditya Birla Group: “Its (Domsjö Fabriker) high quality pulp will enable us enhance the supply of top quality premium VSF to our customers. The Pulp & Fibre business is a core business of the Aditya Birla Group.”
K K Maheshwari, Business Head, Pulp & Fibre said: “This acquisition is in line with our strategy of having a substantive part of our speciality pulp for our consumption through our captive source. With Domsjö Fabriker, we are closer to this goal.”
The group’s VSF business is largely housed under Grasim but the business group operates its overseas fibre operations separately as joint ventures or through an independent holding structure.