United Phosphorus eyes $1-billion buy in Israel

United Phosphorus Ltd (UPL), India’s largest pesticide maker, is in talks with Israel-based Makhteshim Agan Industries (MAI) to buy about 39 per cent stake in the company for around $1.1 billion. The deal, if fructifies, will make UPL the world’s largest generics agrochemical company.

MAI is promoted by Koor Industries, which is a holding company having investments in Israel’s booming businesses such as telecom and agrochemical. UPL executives met Nochi Danker, promoter of Koor Industries, in July.

It had approached six to eight banks to raise funds for the acquisition about three weeks back. The banks include UBS, Deutsche Bank, HSBC, SBI and ICICI. The company declined to comment on the development.

McKinsey has done the evaluation of the synergy potential for MAI while UPL has done the due diligence of the company on its own. “It now depends on whether UPL is able to raise funds for the acquisition in this market,but it could be difficult” said an investment banker familiar with the development.

According to its latest balance sheet, the company has Rs 494 crore cash and bank balance. It also has Rs 350 crore investment in liquid schemes of mutual funds termed as unquoted units in the balance sheet. UPL is supposed to meet the Koor management by the end of this month.

UPL had net sales of Rs 3730 crore for 2007-08 and it reported a net profit of Rs 281.07 crore in that period. On Friday, UPL’s stock was down by 6.83 per cent to Rs 201.95 a share on Bombay Stock Exchange. Sensex, the benchmark index of the exchange, was down by 5.73 per cent to 9975.35, its lowest in more than two years.