International Finance Corporation-backed agrochemical firm Crystal Crop Protection Ltd has agreed to acquire the India commercial business of global crop protection company FMC Corp for $252 million (Rs 2,372 crore), as the company prepares for an initial public offering (IPO).
The transaction, subject to regulatory approvals, will help US-based FMC reduce its debt.
The company said it will continue to receive cash generated from the India operations, primarily through monetization of working capital, until the deal closes.
FMC’s board had approved a plan to divest its commercial business in India “in response to challenges” in the country in July last year.
The acquisition includes FMC India's commercial operations in crop protection, a licence for FMC's brands in India, a preferred supply agreement for certain active ingredients and formulated products, and preferred access to its pipeline of active ingredients in the country, according to a joint statement issued by the companies.
“FMC’s innovative portfolio, blockbuster brands and future pipeline give us an opportunity to provide Indian farmers access to innovative products,” said Ankur Aggarwal, chairman and managing director of Crystal Crop Protection. “We look forward to further enhancing and building on our relationship with FMC.”
Crystal Crop filed draft documents for an IPO in December. The planned IPO includes a fresh issue of Rs 600 crore and an offer-for-sale of 7.4 million shares by the company's promoters and the International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, which owns almost 8.5% stake.
Commenting on the deal, FMC chairman, CEO and president Pierre Brondeau said, “FMC remains committed to India and will continue to conduct global R&D activities and maintain global manufacturing operations in the country.” He added that Crystal Crop is “well-positioned” to serve Indian farmers with FMC’s portfolio.
FMC’s crop protection portfolio spans biologicals, crop nutrition, and digital and precision agriculture. The company also develops herbicide, insecticide and fungicide active ingredients, along with other sustainable formulations and technologies.
Bank of America Securities was the exclusive financial adviser to FMC. EY advised Crystal Crop on the deal, while Shardul Amarchand Mangaldas & Co served as legal adviser.
The impending sale has also weighed on FMC’s global performance. The company's January-March revenue stood at $762 million, down 4% from the corresponding period last year, which included contributions from the India business.
