Tata Chemicals Ltd has entered into an agreement to acquire the precipitated silica business of Allied Silica Ltd for up to Rs 123 crore ($18.9 million) in an all-cash deal, the company said.
According to a stock-exchange filing, Tata Chemicals will also take over the company’s manufacturing unit at Cuddalore, Tamil Nadu. The deal value will, however, be subject to meeting certain conditions and milestones. The transaction is expected to be closed within three months.
Allied Silica, which also manufactures Alumino Silicate, is a subsidiary of Chennai-based Kiran Global Chems Ltd.
The acquisition is part of the Rs 295 crore investments approved by the Tata Chemicals’ board in February 2017 that would allow the company to foray into the highly dispersible silica business. Tata Chemicals also said that the acquisition represents a downstream value addition to its soda ash business.
The technology for manufacturing highly dispersible silica has already been developed at the Tata Chemicals’ innovation centre in Pune, the company added.
The company’s speciality chemical portfolio includes sodium bicarbonate, agrochemicals and planned investments in the greenfield sites for nutraceuticals. Precipitated silica has applications across industries such as rubber, oral care, coatings and agrochemicals.
This is the second attempt by Tata Chemicals to buy a precipitated silica business after a previous deal fell through last year.
In May 2017, the company had agreed to buy the precipitated silica operations of Unnati Inorganics Pvt. Ltd for Rs 34.2 crore ($5.3 million), but the transaction was cancelled in August 2017 by Tata Chemicals due to non-fulfilment of certain conditions set out in the agreement.
In 2016-17, Tata Chemical’s consolidated net sales stood at Rs 13,288.9 crore with net profit of Rs 1,234 crore.
In line with its strategic decision to focus on inorganic and speciality chemicals and foods businesses, Tata Chemicals had agreed to sell its phosphatic fertiliser business to IRC Agrochemicals Pvt. Ltd, which is part of Singapore’s Indorama Corporation Pte Ltd, for Rs $58 million in November 2017.