Coromandel Intl to buy 73% of Sabero Organics for Rs400 crore

Coromandel International Ltd, part of the $3.8-billion Murugappa group, plans to acquire Sabero Organics Gujarat Ltd. Coromandel, the fertilisers and specialty nutrients manufacturer, would pay Rs250 crore to Sabero for acquiring about 42.2% equity. It would also acquire another 31% through an open offer to the investors.

“It is an all cash deal and the open offer for the 31% would be made at ¤160 a share,” Kapil Mehan, Coromandel’s managing director, said. According to him, the total cost of acquisition including the cost of open offer would be at about Rs400 crore.

“The product profile of both the companies complements each other and the combined entity will have unmatched range 16 technical grade pesticides catering to diverse needs of Indian and international customers,” Mehan said.

Following the acquisition, Coromandel is hopeful of being among the top five agrochemical manufacturers in the country.
“After the acquisition the combined entity will be among the top two or three agrochemicals makers with Rs1,000-crore revenues from plant protection chemicals alone in this fiscal. The other complementary advantage is that Sabero has a large export base with almost 50% revenues coming from global markets which will be leveraged by Coromandel to expand its international base,” Mehan said.

Currently, of the Rs450 crore revenue, Sabero earns around Rs250 crore through exports. Coromandel’s export revenues in the total revenue of Rs7,527 crore are pegged at about Rs75 crore.

Though Sabero owns a large manufacturing base with an installed capacity of 60,000 tonne, utilisation has continued to remain at about 40% due to a variety of reasons.