Fertiliser producer Coromandel International Ltd is acquiring almost the entire stake held by promoters of Liberty Phosphate besides two other private group firms for around Rs 284 crore ($53 million).
The stake purchase from the promoters of Liberty, which could vary between 53.6 per cent and 61.4 per cent as per the agreement, has also triggered an open offer for another 26 per cent public stake that could cost another Rs 90.5 crore, if fully successful.
Dhanani family, the promoters of Liberty Phosphate, currently hold 61.4 per cent stake. A part of this is through two private firms Liberty Urvarak Ltd and Tungabhadra Fertilizers & Chemicals Co Ltd that are also being acquired by Coromandel as a going concern for Rs 88 crore.
The deal has been struck at Rs 241 a share. Liberty Phosphate scrip closed at Rs 213, down 2 per cent on the Bombay Stock Exchange in a weak Mumbai market on Thursday. Although the deal announcement came after market hours news of an impending deal was doing the rounds on Dalal Street for the past few months. Coromandel International shares closed at Rs 231 a unit, down 3.2 per cent on Thursday.
Axis Capital and SMC Capitals acted as financial advisors and AZB & Partners was the legal advisor in the transaction.
Liberty is one of the top players in Single Super Phosphate (SSP) fertilizer in India with 14 per cent market share. It has six units situated at Udaipur and Kota in Rajasthan, Baroda in Gujarat, Pali in Maharashtra, Nimrani in Madhya Pradesh & Hospet in Karnataka. It is expected to close the financial year with 9.6 lakh MT capacity and combined licensed capacity of 8.09 lakh MT. It is also setting up a greenfield unit at Rae Bareli with a capacity of 1.32 lakh MT.
For the year ended March 2012, it clocked revenues of Rs 490 crore with net profit of Rs 54 crore. Adding the financials of Liberty Urvarak and Tungabhadra Fertilizers to this the combined entity had revenues of Rs 645 crore with net profit of Rs 68 crore.
Murugappa Group flagship Coromandel International is one of the top private manufacturer and marketer of fertilisers, speciality nutrients, crop protection. This deal will make it largest SSP fertiliser player in the country, a segment where it is a bit player currently, with capacity of over 1 million MT.
A Vellayan executive chairman at Murugapppa Group said, "SSP with higher indigenous raw material content provides a hedge against foreign exchange fluctuation."
Around two years ago it had acquired Sabero Organics, a leading producer and supplier of crop protection chemicals and specialty chemicals.
Coromandel has also ventured into the retail business with more than 420 rural retail centers in the agri segment called Mana Gromor.
Coromandel is the second largest phosphatic fertiliser player in India. It has also introduced a range of speciality nutrient products including organic fertilisers. The crop protection business produces insecticides, fungicides and herbicides.
It clocked revenues of Rs 9902 crore with net profit of Rs 639 crore in FY12. Liberty as a group has higher margins and Coromandel will reap that benefit going forward.
(Edited by Prem Udayabhanu)