MUMBAI: Kumar Mangalam Birla-led Aditya Birla Group has acquired Atlanta-based Columbian Chemicals Company from One Equity Partners, the merchant banking arm of JP Morgan Chase, for $875 million (about Rs 4,016 crore), catapulting the Indian major into the largest global producer of carbon black by volume.
This is Aditya Birla Group's second largest overseas buy after the $6-billion acquisition of Canada-based aluminum company Novelis in 2007. The deal, which gives the group's carbon black business a truly global presence, is also the largest cross-border transaction to have kicked in this calendar year. To be completed by mid-2011, the deal would bolster AV Birla Group's combined carbon black capacity to 2 million tonne, toppling Cabot from its dominant position (1.9 million tonne). Post acquisition, the turnover of the group's carbon black business will go up from $900 million to $ 2billion. With Aditya Birla Group adding 2.50 lakh tonne capacity, it is expected to widen the gap with its closest rival. The deal is valued 6 times the EBIDTA of $140 million. . Carbon black is a fine powder used in the rubber industry for tyres and as pigments for paints and inks. The The
For the cement-to-telecom Aditya Birla Group, the Columbian acquisition is part of its larger vision to attain dominance in each of the business the conglomerate is present in. The Novelis purchase propelled group company, Hindalco as the world's largest aluminum rolling company. At the same time, UltraTech Cement is the largest cement maker in the country. "The deal is in line with our vision to be among the top three players in a given business. The acquisition of Columbian Chemicals is a perfect fit for Birla Carbon. Their assets and the expertise of the team will provide a stronger platform for higher growth and ongoing success,'' said group chairman Kumar Mangalam Birla, at a press conference. TOI had reported about the deal in its edition dated January 21.
Columbian Chemicals operates 11 plants in nine countries, while Birla Carbon's operations are spread across four countries with six units. The group's carbon black business operates under different companies. In Thailand, it is under Thai Carbon Black, while in Egypt it is under Alexandria Carbon Company. In China, it operates through Liaoning Birla Carbon Company, while in India it operates as a division (Hi-Tech Carbon) under Aditya Birla Nuvo.
The group has routed the purchase of Columbian Chemicals through three companies-Alexandria Carbon Black (41%), Thai Carbon Black (41%) and SKI Investment (28%), a special purpose vehicle for carbon black. The deal is completely funded through debt taken from five foreign banks-ANZ, BankAm, HSBC, RBS and StanChart. "We have taken a fresh debt. The loan has been taken on a tenure of 5-7 years and will be repaid from the cash flows among the three companies or refinanced at a later date,'' D Muthukumaran, head, group corporate finance, AV Birla group, told TOI. The urgency with which the group has pursued the globalization agenda for carbon black stems from the keenness of global tyre companies that the group establishes a presence in markets like North America and Europe. With the automobile market growing at a rapid pace, there is good demand being generated for tyres as well. Globally, 70% of the carbon black produced is used in the manufacture of tyres. Nearly 60% of this is consumed by the three leading tyre makers-Bridgestone, Goodyear and Michelin. The AV Birla group, which is among the strategic suppliers to the tyre companies, will get a further boost in its preferred supplier status from the acquisition of Columbian Chemicals.
"Most of the large tyre companies have operations in North America and European markets. They would prefer any supplier to supply them in those markets. Earlier, some of our competitors had that advantage. We didn't have it. We were earlier a regional supplier and this deal makes us a truly global supplier to the tyre companies,'' said Santrupt Misra, CEO, Birla Carbon and director, HR, AV Birla group.
As for the tyre industry, there is a growing concern for safety which have added to the demand for better quality products. This aspect seems to have gone in AV Birla group's favour.
toi
This is Aditya Birla Group's second largest overseas buy after the $6-billion acquisition of Canada-based aluminum company Novelis in 2007. The deal, which gives the group's carbon black business a truly global presence, is also the largest cross-border transaction to have kicked in this calendar year. To be completed by mid-2011, the deal would bolster AV Birla Group's combined carbon black capacity to 2 million tonne, toppling Cabot from its dominant position (1.9 million tonne). Post acquisition, the turnover of the group's carbon black business will go up from $900 million to $ 2billion. With Aditya Birla Group adding 2.50 lakh tonne capacity, it is expected to widen the gap with its closest rival. The deal is valued 6 times the EBIDTA of $140 million. . Carbon black is a fine powder used in the rubber industry for tyres and as pigments for paints and inks. The The
For the cement-to-telecom Aditya Birla Group, the Columbian acquisition is part of its larger vision to attain dominance in each of the business the conglomerate is present in. The Novelis purchase propelled group company, Hindalco as the world's largest aluminum rolling company. At the same time, UltraTech Cement is the largest cement maker in the country. "The deal is in line with our vision to be among the top three players in a given business. The acquisition of Columbian Chemicals is a perfect fit for Birla Carbon. Their assets and the expertise of the team will provide a stronger platform for higher growth and ongoing success,'' said group chairman Kumar Mangalam Birla, at a press conference. TOI had reported about the deal in its edition dated January 21.
Columbian Chemicals operates 11 plants in nine countries, while Birla Carbon's operations are spread across four countries with six units. The group's carbon black business operates under different companies. In Thailand, it is under Thai Carbon Black, while in Egypt it is under Alexandria Carbon Company. In China, it operates through Liaoning Birla Carbon Company, while in India it operates as a division (Hi-Tech Carbon) under Aditya Birla Nuvo.
The group has routed the purchase of Columbian Chemicals through three companies-Alexandria Carbon Black (41%), Thai Carbon Black (41%) and SKI Investment (28%), a special purpose vehicle for carbon black. The deal is completely funded through debt taken from five foreign banks-ANZ, BankAm, HSBC, RBS and StanChart. "We have taken a fresh debt. The loan has been taken on a tenure of 5-7 years and will be repaid from the cash flows among the three companies or refinanced at a later date,'' D Muthukumaran, head, group corporate finance, AV Birla group, told TOI. The urgency with which the group has pursued the globalization agenda for carbon black stems from the keenness of global tyre companies that the group establishes a presence in markets like North America and Europe. With the automobile market growing at a rapid pace, there is good demand being generated for tyres as well. Globally, 70% of the carbon black produced is used in the manufacture of tyres. Nearly 60% of this is consumed by the three leading tyre makers-Bridgestone, Goodyear and Michelin. The AV Birla group, which is among the strategic suppliers to the tyre companies, will get a further boost in its preferred supplier status from the acquisition of Columbian Chemicals.
"Most of the large tyre companies have operations in North America and European markets. They would prefer any supplier to supply them in those markets. Earlier, some of our competitors had that advantage. We didn't have it. We were earlier a regional supplier and this deal makes us a truly global supplier to the tyre companies,'' said Santrupt Misra, CEO, Birla Carbon and director, HR, AV Birla group.
As for the tyre industry, there is a growing concern for safety which have added to the demand for better quality products. This aspect seems to have gone in AV Birla group's favour.
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