Tata Chemicals has made an open offer of $450 million (over Rs 1,950 crore at an exchange rate of Rs 43.40 per dollar) to acquire Egyptian Fertilisers Company, a firm partially owned by the government of Egypt. Homefield International, a wholly-owned subsidiary of Tata Chemicals, has offered to buy 1.475 million Egyptian Chemicals shares, representing a 100 per cent stake in the company, at $305 per share. The face value of the share is $100 each.
PK Ghose, chief executive officer of Tata Chemicals, said Homefield had already signed an agreement with the majority shareholders, who hold over 88 per cent stake in the company. "The bid has been made to buy out the others as well. The minimum acceptance of the offer is 88.25 per cent, meaning the Tata company will not buy any share unless it gets this," he added. The Tata Chemical stock closed today at Rs 165.60, marginally higher than yesterday's closing of Rs 164. It touched an intra-day high of Rs 168.
The Egyptian company was put up for sale through the government's disinvestment policy. The public shareholding of the company stands at 46 per cent and the combined shareholding of banks, government and institutions is 54 per cent. Ghose said Tata Chemicals would fund the acquisition through the recently concluded foreign currency convertible bonds, internal accruals and bridge loans. The Egyptian company, which manufactures urea and ammonia, enjoys a 25-year tax holiday and is located in the Suez Industrial Zone.
It has a state-of-the-art plant to manufacture about 400,000 tonnes of ammonia and 650,000 tonnes of urea, employs about 400 people and has a marketing presence in Europe, North America and Africa. The company is in the process of doubling its capacity by 2006. "The bid has been submitted in line with our growth aspirations. We are one of the bidders and this open offer process is also subject to counter offers by other parties.
TCL has recently acquired one-third stake in a Moroccan Joint Venture, IMACID in March 2005 and we are on a continuous lookout for domestic and global opportunities. It is too early to comment on the exact details of the deal," Ghose said. The open offer comes close on the heels of the Chatterjee Group's $5.5 billion acquisition of Basell Polyolefins.