Yara acquires Tata Chemicals' urea business for $400m
Norwegian chemical company Yara International has acquired Tata Chemicals' (TCL) Babrala urea plant and distribution business in Uttar Pradesh, India, for $400m on a debt and cash free basis, which also includes normalised net working capital.
TCL’s Babrala plant annually produces 0.7 million tonnes of ammonia and 1.2 million tonnes of urea.
Over the financial year that ended on 31 March, the Babrala plant generated revenues and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $350m and $35m, respectively.
Yara International president and chief executive officer Svein Tore Holsether said: “This acquisition represents another significant step in our growth strategy, creating an integrated position in the world's second-largest fertiliser market.
“India has strong population growth and increasing living standards, and significant potential to improve agricultural productivity.
“We are impressed with the world-class operations we have seen in Babrala. The workforce is committed to high HESQ standards, and has a solid safety track record.
“This well operated plant and its highly skilled employees will make an excellent addition to Yara's global production system.”
Yara has been operating in India since 1990, and has recently focused on the sale of premium products in the southern and western regions of the country.
Yara Crop Nutrition SVP and head Terje Knutsen said: “Our growth in India can be further accelerated with this acquisition, creating a larger market footprint for Yara and enabling increased premium product sales in particular.
“We will place great emphasis on successful integration of the operations, and will put in place an integration team consisting of highly experienced TCL and Yara employees, the latter from both our existing India operations and our regional management.”
The agreement will be subject to regulatory approvals and sanctioning by courts in India.
The company expects the process to be completed in between 9 to 12 months.