Tata buys US firm for $1b

Tata Chemicals Ltd, part of India's second-largest business group, agreed to buy US-based General Chemical Industrial Products Inc for $1 billion to become the world's second-largest maker of soda ash.

Tata Chemicals will acquire a majority stake from Harbinger Capital Partners, it said yesterday.

Tata Group Chairman Ratan Tata has acquired the world's largest maker of tea and the United Kingdom's biggest steelmaker as he uses his dominance of industries from autos to software to fund an overseas push. General Chemical has the capacity to produce 2.5 million tons of natural soda ash used to make glass and detergents at its facility in Green River Basin, Wyoming.

"They may seem to be growing fast but then India is a growing story and if you have the financial muscle, why not?" Rohit Nagraj, an analyst with Angel Broking Ltd, said in Mumbai. "As a conglomerate they have been able to integrate the acquisitions well."

Shares of Tata Chemicals fell 7.3 percent on the Bombay Stock Exchange, reversing an earlier gain, and valuing the maker of caustic soda and fertilizers at about $1.8 billion. The acquisition is subject to shareholder and regulatory approval, according to the statement.

Standard Chartered Plc and Lazard Ltd advised Tata Chemicals on the acquisition.

General Chemicals produces natural soda ash which uses less energy, capital and raw materials than synthetic soda, the company said on its website. The privately held company had revenue of $400 million last year and is debt free, Tata said.

Tata Chemicals, India's biggest producer of salt, manufactures and sells soda ash, cement, sodium bicarbonate and food additives, including edible salt and cooking soda. Its fertilizers unit produces urea and phosphate for agricultural use.

Tata Chemicals in December 2005, bought UK-based Brunner Mond Group, raising its soda ash capacity to about 3 million tons, accounting for 8 percent of the global market.

Operations of the firm remain small when compared with its international peers, Moody's Investors Service said last month. It rates the company foreign currency bonds at Baa3, the lowest level of investment grade.

The combined group will command about 14 percent of the world soda ash capacity, Rohan Gupta, an analyst with Emkay Share & Stock Brokers Ltd, said in Mumbai.

"Funding shouldn't be a problem as they will be able to raise debt and may have to liquidate some of their investments," he said.

Agencies

(China Daily 02/01/2008 page17)