Rain Commodities Limited is acquiring 100 per cent stake in Belgium-based coal tar pitch manufacturer Rutgers NV for a gross enterprise valuation of €702 million or $915 million. The company has been acquired from its private equity owner Triton Partners through the Hyderabad-based firm's wholly owned subsidiary Rain CII Carbon LLC.
Rain CII will fund the deal through issue of €533 million or $695 million long term bonds and internal accruals. Citigroup Global Markets is the financial advisor to the deal while Skadden, Arps, Slate, Meagher & Flom LLP are legal advisors.
The deal is expected to close by first quarter of 2013 subject to regulatory approvals and customary closing conditions.
According to a Motilal Oswal report dated April 2012, the company had net debt to equity ratio of 1.1x. Its gross debt stood at $679 million while cash and cash equivalents stood at $216 million, as of Q1CY12.
Shares of Rain Commodities opened at Rs 44.1, up by 2.08 per cent on Monday. This gives the company a market capitalisation of Rs 1,562.02 crore, which is less than a third of the size of the acquisition.
Rutgers uses a by-product of the coal coking process to produce essential basic materials for the aluminium and steel industries as well as technical oils, naphthalene and other basic chemicals. Rutgers was sold by Germany's specialty chemicals major Evonik Industries in late 2007 to Triton Partners. The company had revenues of €831 million or $1,082 million for calendar year 2011.
The acquisition of Rutgers will be complementary to its core business of making of CPC. "Expanding into tar distillation business constitutes both product and geographical diversification to Rain Group and provides vertical depth within its core business," said a statement.
Rain Commodities is the world's largest manufacturer of calcined petroleum coke and is also involved in production of cement, energy and trading fuel grade green petroleum coke.Rain operates nine coke calcining plants in US, China and India and sells CPC to customers primarily in aluminium, steel and titanium-dioxide industries.
Rain also has four waste hear recovery plants and is in the process of setting up a fifth plant. It also operates two cement plants in Andhra Pradesh and one fly ash handling and cement packing facility in Karnataka.
Rain Commodities reported a 50 per cent increase in net sales to Rs 5,620 crore in CY11 with adjusted profit after tax jumping 176 per cent to Rs 664 crore as compared to CY10.