Norwegian chemicals giant Yara International ASA on Wednesday announced that it had entered into an agreement to acquire the Tata Chemicals Babrala urea plant and distribution business in Uttar Pradesh for $400 million.
This will be on a debt and cash free basis, including normalised net working capital, the Nordic firm said in a media release issued on its website.
Yara president and chief executive Svein Tore Holsether called the acquisition a “significant step” in their growth strategy “creating an integrated position in the world’s second-largest fertilizer market.” India has strong population growth and increasing living standards, and significant potential to improve agricultural productivity,” he added.
The Tata Chemicals Babrala plant – which was commissioned in a record 36 months in 1994, the fastest for a fertiliser plant -- has an annual production of 0.7 million tonnes ammonia and 1.2 million tonnes urea. It generated revenues of $350 million in FY2016. The plant is viewed to be one of the most energy efficient plants in India.
Tata Chemicals is the world’s second largest producer of soda ash with manufacturing facilities in Asia, Europe, Africa and North America.
Yara has worked in India since the 1990s, focusing on premium product sales in western and southern regions of the country. Yara’s pace of growth in India would accelerate with this acquisition, creating a larger market footprint for Yara and enabling increased premium product sales in particular.
The agreement is subject to regulatory approvals and Indian court sanctions. This process could take between 9 and 12 months following which the transaction would be closed, the Yara statement said.
An integration team comprising Tata Chemicals and Yara staff will be put in place for this operation, said Terje Knutsen, senior vice president and Head, Yara Crop Nutrition.