Anupam Rasayan stock hits new 52-week high after inking a deal to buy stake in Tanfac Industries from Birla Group and others

2 Feb 2022 , 10:55 AM

One of India’s leading custom synthesis and speciality chemical players, Anupam Rasayan India has received its board of directors approval for the acquisition of 24.96% of the total equity shareholding of and joint control of Tanfac Industries Limited (“TIL”) from Birla Group Holdings Private Limited (“BGH”), (a promoter company which is part of Aditya Birla Group) and few other promoter groups of TIL (“Sellers”) and the launching of an open offer to acquire a further 26% shareholding from the public shareholders of TIL.

Notably, Anupam Rasayan has also executed an amendment agreement to the joint venture agreement dated 4 October 1980 between Tamil Nadu Industrial Development Corporation (“TIDCO”) and Birla Group Holdings Private Limited according to which ARIL will replace BGH as the joint venture partner of TIDCO in TIL, subject to compliance with the Securities Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011.

The consideration for the acquisition of shares from the Sellers is Rs148.14cr and the open offer (assuming full acceptance) is Rs154.31cr which will be funded through debt. According to the acquisition, ARIL will become a promoter and will have joint control in TIL along with TIDCO.

Anand Desai, Managing Director of ARIL, said, “We are very pleased to announce our investment in Tanfac industries. Tanfac is strategically fit for our fluorination chemistry business. This will not only reduce our import dependence but will also let us launch new derivatives under this chemistry which was not possible earlier. We will add niche fluoro derivatives which will have application in Crop protection, Pharma intermediates and Polymers such as Fluoro Elastomers and Fluoro Electrolytes and other Polymers which have application in Polyamide and Semiconductors.”

Desai added, “We will also expand the speciality chemical business of TIL, thereby improving existing margins of TIL. This business will be EPS accretive from day one. We aim to unlock the full potential of the Tanfac Industries and drive significant value creation through synergies between Anupam and Tanfac.”

This acquisition is a strategic decision to expand the product series under the fluorination chemistry of ARIL. It brings synergies by way of backward integration initially as ARIL is one of the largest consumers of Potassium Fluoride in India which would be supplied by TIL. With access to these basic fluoro compounds and the expertise of ARIL’s core R&D team, we will be able to introduce niche value-adding fluorine derivatives in the coming years. ARIL will also strengthen the TIL’s team by adding highly experienced professionals to its R&D and plant level.

Singhi Advisors is the financial advisor for this transaction. Edelweiss Financial Services Limited acted as a manager to the open offer and Shardul Amarchand Mangaldas & Co., Advocates and Solicitors as the legal advisor to the transaction.

At around 10.51 am, Anupam Rasayan was trading at Rs1048.85 per piece higher by Rs39.15 or 3.9% on Sensex. The stock has touched a new 52-week high of Rs1106 per piece earlier today.