March 27, 2008
Tata Chemicals announces successful closure of the acquisition of General Chemical Industrial Products (US) to become the second largest soda ash company in the world
Tata Chemicals, part of the Tata group, has today, upon receipt of necessary regulatory approvals, successfully completed the acquisition of General Chemical Industrial Products Inc (General Chemical) in the US for a total consideration of just over $1bn ($1,005mn), making Tata Chemicals the world’s second largest soda ash company. General Chemical's subsidiary, General Chemical (soda ash) Partners (GCSAP), is one of the largest soda ash producers in the US with a capacity of 2.5million tpa of natural soda ash. The company’s mining and manufacturing facilities located at Green River Basin in Wyoming, US, are assets of a very high quality, providing access to some of the world’s largest and most economically recoverable trona ore deposits that are then converted to soda ash.
The acquisition of General Chemical takes Tata Chemicals's total global capacity up from around 3million tonne to around 5.5 million tonne of soda ash per annum. Tata Chemicals had in 2005-06 acquired the Brunner Mond group of companies, a leading producer of soda ash with a presence in the UK, Netherlands and Kenya.
A unique advantage that Tata Chemicals now enjoys is that a majority of its capacity will be from natural soda ash, which is not only cheaper but more environmentally-friendly than soda ash made by the synthetic route. The acquisition also gives Tata Chemicals access to two of the lowest cost natural soda ash reserves in the world (Wyoming, USA and Magadi, Kenya). With this acquisition, Tata Chemicals now has manufacturing locations in four continents and access to consumers around the world, including new markets it was not earlier in, viz North America, Latin America and certain markets in the Far East.
Tata Chemicals is also happy to announce that it has, in record time, successfully arranged funding for the acquisition. This is through a mixture of term financing (through the ECB route) of $500mn and bridge financing (in the US) of $350mn, raising a total of $850mn at extremely competitive rates in what is regarded presently as a difficult market. There will be no recourse to further equity for funding this acquisition.
Homi Khusrokhan, managing director of Tata Chemicals said, “I am delighted at the speed and smoothness with which this deal was completed. The company’s global scale, spread and presence in natural soda ash will be of great strategic advantage to us in the years ahead. General Chemical is a company we have admired for many years and the significant presence we will now have in the Green Valley Basin in Wyoming is going to be hugely advantageous for us going forward. While size is important, the ability to be able to construct the world’s premier soda ash business, is even more exciting."