Haldia Petrochemicals Ltd, majority owned by The Chatterjee Group (TCG), together with global private equity firm Rhone Capital, has acquired Texas-based Lummus Technology for an enterprise value of $2.725 billion (Rs 20,592 crore at current exchange rate).
Haldia and Rhone have jointly acquired the petrochemicals licensing company through a sale conducted by its parent McDermott International Ltd, which provides engineering and construction for the energy industry, in a bid to exit bankruptcy.
Houston-based McDermott will use the proceeds to repay debtor-in-possession financing as well as fund emergence costs besides providing cash to its balance sheet.
McDermott had entered into an agreement with TCG and Rhone – the stalking horse bidders – in January this year for a base price of $2.725 billion subject to higher or otherwise better bids received through a court-supervised auction process.
On March 3, McDermott said: “(It) did not receive a higher or better bid during the solicitation period”. It also cancelled its next auction the same month.
Under the terms of the agreement with TCG and Rhone, McDermott had the option to retain or purchase 10% common equity ownership interest in the entity purchasing Lummus Technology.
Lummus is a master licensor of proprietary gas processing, refining, petrochemical, and gasification technologies as well as a supplier of catalysts, equipment and related services.
These technologies are critical in the refining of crude oil into petrol, diesel, jet fuel and lubes besides the manufacturing of petrochemicals and polymers as well as gasification of coal into syngas.
The company has more than 125 licensed technologies and 3,400 patents and trademarks.
The acquisition will help TCG with technological improvements. McDermott provides engineering and construction services for the energy industry.
"Our investments are both strategic and long-term, where most span across 25-30 years. We have primarily focused on knowledge-based companies, and Lummus is a great addition to our portfolio. Lummus delivers sustainable value to clients in the area of materials technology," said TCG’s founder and chairman Dr Purnendu Chatterjee.
Besides the sale of Lummus, McDermott also sold The Shaw Group, which was acquired by Chicago Bridge & Iron (CB&I) in 2013. McDermott had acquired CB&I in 2018.
In early 2019, TCG had also emerged a winner in acquiring the securities business of IDFC Ltd, outbidding a number of other suitors.
TCG had agreed to pay a total of Rs 161.7 crore. However, IDFC called off the deal with TCG in July 2019. The following month, it struck a deal with Dharmesh Mehta, who resigned as the chief executive of investment banking firm Axis Capital.