Binani Industries Ltd, the public-listed holding company of Braj Binani Group, has acquired Belgium’s fibreglass products and technologies company 3B from US-based private equity firm Platinum Equity for €275 million ($360 million or Rs 1,796 crore), the company has disclosed in a statement today.
The acquisition will give Binani Industries full ownership of 3B’s global operating capacity of 1,50,000 tonnes per annum and provide access to its established customers, world class technologies, marketing network and manpower, the statement adds.
3B develops and supplies fibreglass products and technologies for the reinforcement of thermoplastics and thermosets. It serves aerospace, automotive, building & construction, chemical plant & pipe work, defence & ballistics, electrical & electronic, energy, infrastructure, machines & domestic appliances, marine, mass transit and sports & recreation markets.
The company has manufacturing facilities in Birkeland in Norway and Battice in Belgium. It also plans to set up a new facility in Tunisia in 2013, which will raise its capacity to 0.2 million TPA. As much as 45 per cent of 3B’s customers are in Germany, followed by the Netherlands and Belgium (14 per cent each). 3B posted net sales of €159 million ($208 million) in 2010.
The company has an extensive portfolio of products, including chopped strands, direct rovings and continuous filament mats. Goa Glass Fibre Ltd, a subsidiary of Binani Industries with a manufacturing capacity of 20,000 TPA, also has operations in similar product categories and exports its products to more than 15 countries across five continents.
“The acquisition will strengthen our group’s core operations at a global level. The group is present in fast-growth business segments, of which fibreglass is one. We look forward to leveraging its expertise, strong R&D and excellent customer network,” said Braj Binani, chairman of Binani Industries, while commenting on the acquisition.
3B is Braj Binani Group’s third global acquisition in six years. Last year, the group acquired US-based composite maker CPI, Inc. With this latest acquisition, Binani Industries has completed the vertical integration of its composite and fibreglass operations.
Binani Industries, part of the $1.6 billion Braj Binani Group, manufactures and markets cement, electrolytic zinc, glass fibre and composites in India and abroad. It posted consolidated revenues of Rs 2,427 crore, with net loss of Rs 45.4 crore for the year ended March 2011. The company has high interest cost which raises a question mark on how it will fund the large acquisition.
Binani Industries’ scrip was locked at the upper circuit for the day at Rs 116.65 a share, up 5 per cent in a strong Mumbai market on Thursday. At this price, the company has a market cap of just Rs 345 crore ($69 million).
According to the company, the fibreglass industry worldwide is essentially driven by the composites market, which is set to grow at 4.5 per cent annually. Globally, fibreglass demand is set to post a compounded annual growth rate (CAGR) of 8.2 per cent by 2014. This growth will be led by the Middle East and Africa (13.3 per cent), followed by Europe (9.5 per cent), Latin America (8.5 per cent), the Asia-Pacific (8.3 per cent) and North America (3.8 per cent).
In Europe, applications of fibreglass in automotive and wind energy sectors are likely to grow annually by 6 per cent and 15 per cent, respectively, according to the company’s projections. The European wind energy market is likely to emerge as a particularly high growth space for fibreglass applications which will, in turn, increase the demand for direct rovings. Markets such as Latin America, the Middle East & Africa, the Asia-Pacific and North America are also poised for high growth in wind energy, requiring fibreglass applications.
Binani Industries has pointed out that no new melting capacity has been installed in India since 2002 and in order to meet the market needs, especially that of Europe, an additional 2,00,000 tonnes of production capacity will be required. Moreover, lowering inventories amid increasing demand and anti-dumping legislation curbing cheap imports from countries like China have positively impacted the fibreglass market in Europe and elsewhere.