Pidilite Industries Ltd said Thursday it has agreed to acquire the India unit of US-based Huntsman Group that makes adhesives and sealants under brands such as Araldite and Araseal.
The maker of Fevicol adhesives said in a statement it will buy Huntsman Advanced Materials Solutions Pvt. Ltd for Rs 2,100 crore (about $284 million) in cash. The amount excludes customary working capital and other adjustments.
In addition to the Indian subcontinent business, the acquisition includes a trademark licence for the Middle East, Africa and ASEAN countries, Pidilite said.
Pidilite will pay 90% of the deal value when the deal closes and the balance as an earnout payment within 18 months if the business achieves sales in line with 2019. The transaction is expected to close by next week.
In the calendar year 2019, revenue of the business that Pidilite is buying was approximately Rs 400 crore.
Bharat Puri, managing director at Pidilite, said the acquisition will create significant shareholder value through strong revenue and cost synergies. “Araldite will add to the already very strong portfolio of Pidilite’s adhesive and sealant brands and will complement our retail portfolio,” he said.
Shares of Pidilite rose 2.7% to Rs 1,559.85 apiece on the BSE in morning trade when the broader markets were down 0.3%.
This is Mumbai-based Pidilite’s second acquisition this year to grow its business. In February, Pidilite acquired a 70% stake in the Indian unit of Italian cement and chemicals manufacturer Tenax SPA for around Rs 80 crore.
Previously, the company agreed to buy a 70% stake in floor coating maker CIPY Polyurethanes Pvt. Ltd for Rs 96.4 crore in January 2018.
Pidilite is best known for its consumer adhesive brand Fevicol. Its other famous brands are Fevikwik, M-Seal and Dr Fixit. Apart from consumer-focussed adhesives, it also makes industrial resins, polymers and construction chemicals.
The company's consolidated net sales rose to Rs 7,294.5 crore for the year through March 2020 from Rs 7,078 crore, its annual report shows. Consolidated net profit increased to Rs 1,122 crore from Rs 928 crore.