Tata Chemicals to buy UK salt firm; shares rise

Tata Chemicals' British unit, Brunner Mond, has signed a binding agreement to acquire British Salt Ltd for 93 million pounds, the Indian company said on Monday.

The acquisition provides an opportunity to secure long term supply of brine for Brunner Mond, the Indian firm said in a statement on Monday, pushing its share up more than 2%.

The acquisition would be financed entirely via debt with no recourse to Tata Chemicals, it said. Tata Chemicals is part of the salt-to-software Tata group.

British Salt is a manufacturer of pure dried vacuum salt and has a market share of 50% in UK and owns brine wells in there with residual life of 50 years.

"In terms of valuation, it is attractive," Mehul Desai, analyst with KR Choksey Shares and Securities, said talking about the deal.

"The acquisition also fits in terms of business strategies and we remain positive on this acquisition for Tata Chemicals," Desai added.

Apart from the core business of salt, British Salt is also active in the gas storage business and has a business model, which has a potential to generate additional cash flows for the business, Tata Chemicals said in a statement.

The Mumbai-based firm had signed an agreement in October to 100 percent equity of South Africa-based bio-fuels firm Grown Energy Pty for $1.1 million.

At 10.21 am, shares of Tata Chemicals were trading at 373.25 rupees, up 0.53% in a weak Mumbai market.