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Nihon Nohyaku acquires Hyderabad Chemicals
Nov. 28, 2014
Nihon Nohyaku, a Japanese fine chemicals maker, has acquired around 74% stake in Hyderabad Chemicals in a Rs 450-crore deal, three people with knowledge of the development said. The transaction highlights the growing interest of Japanese corporations to have some sort of a base in India.
Tokyo-listed Nihon Nohyaku will get a large Indian foothold along with the technical know-how that Hyderabad Chemicals has acquired over the past three decades.
The company announced its acquision on the Tokyo Stock Exchange on Thursday. "The promoter, Shroff family, has sold around 74% stake in the company to Nihon. They will continue to manage the company along with members of Nihon," a person involved in the deal said.
Promoted by the Shroff family of the Excel Shroff Group, Hyderabad Chemicals is being valued at aroundRs 620 crore. The company, that manufactures technical-grade pesticides and pesticides formulations, has a large research and development division that prompted Nihon to zero in on it, investment bankers privy to the transaction said. For the financial year ended March 31, 2014, the company had a turnover of $65 million.
"Generally, agrochemical companies are valued at 1.5-2.5 times their earnings," a banker said on the condition of anonymity.
While KPMG advised Nihon on the transaction, EY's M&A advisory team was the exclusive financial advisor to Hyderabad Chemicals.
The Rs 10,000-crore agrochemical industry in India is one of the largest markets in Asia and is expected to attract many more multinational companies to come hunting for mergers and acquisitions, say experts.
Source: The Economic Times
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