Mumbai: Tata Group-controlled Tata Chemicals Ltd will sell its business of sale and distribution of urea and customised fertilizers manufactured at Babrala, Uttar Pradesh, to Yara Fertilisers India Pvt Ltd for Rs.2,670 crore.
Tata Chemicals will continue to own the brands Paras, TKS and Daksha. This transaction does not include specialty products and complex fertilizers.
The urea business along with the assets, liabilities, contracts, deeds etc shall be transferred and vested with Yara India on a slump sale basis, Tata Chemicals said on Wednesday.
Slump sale means the transfer of one or more undertakings as a result of the sale for a lump-sum consideration without values being assigned to individual assets and liabilities.
Yara India is a unit of Yara International ASA, which is founded in 1905 to solve emerging famine in Europe. At present, Yara has a worldwide presence, with close to 13,000 employees and sales to more than 150 countries.
The divestment of the Urea business by Tata Chemicals will unlock value for the company, strengthen its balance sheet and will help to pursue growth potentials and opportunities in line with its strategic directions.
The company has a consolidated debt of Rs.8,694.25 crore as on 31 March 2016.
“This process of divestment by Tata Chemicals is in line with the strategic direction of the company to continue to strengthen the fertilizer businesses by partnerships and/or transfer of ownership to world class companies. The urea business will now have the benefit of international network of Yara and its global expertise,” Tata Chemicals said.
R. Mukundan, managing director, Tata Chemicals, said that this marks a decisive move on the part of the company to move forward on its strategy to build consumer business while maintaining leadership in inorganic chemicals business and focusing the farm business through its subsidiary Rallis Ltd and Metahelix.
Tata Chemicals was supported by Kotak Investment Banking and JM Financial Institutional Securities Ltd as transaction advisors, Deloitte Touche Tohmatsu India LLP as Financial & Tax Advisor and AZB & Partners as Legal Advisor for this deal.
Yara India said it will buy Tata Chemicals’ Babrala urea plant and distribution business in Uttar Pradesh for Rs.2,670 crore on a debt and cash free basis, including normalized net working capital.
(Sourced from agencies, Feature image courtesy:economictimes.indiatimes.com)
