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Tata Chemicals to buy UK salt firm; shares rise

Tata Chemicals to buy UK salt firm; shares rise
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First Published: Mon, Dec 20 2010. 02 38 PM IST
Updated: Mon, Dec 20 2010. 02 38 PM IST
Mumbai: Tata Chemical’s UK arm buys British Salt for Rs 650 crore Tata Chemicials Ltd has said on Monday that its UK subsidary Brunner Mond has signed a binding agreement to acquire 100% stake of British Salt Ltd for £93 million (Rs 650 crore).
British Salt is UK’s leading manufacturer of pure dried vacuum salt products and it enjoys 50% market share in that country. The acquisition provides an opportunity to secure long term brine (salt)supplies for Brunner Mond’s operations.
British Salts owns brine wells in UK with residual life of 50 years. Apart from the core business of salt manufacturing and supplying, British Salt is also active in gas storage business and has a promising business model which has potential to generate additional cash flows for the combined entity.
The acquistion is financed through debt by Tata Chemical on an non recourse basis.
Tata Chemicals’ managing ditector R Mukundan said on Monday that, “the acquisition is in line with the strategy of Tata Chemical to depen its presence int he food and farm sector, and will result in securatising material for Brunner Mond, which is a soda ash maker. British Salt has a production capacity of at least 7.20 lakh tonnes a year.
“In terms of valuation, it is attractive,” Mehul Desai, analyst with KR Choksey Shares and Securities, said talking about the deal.
Reuters contributed to the story.
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First Published: Mon, Dec 20 2010. 02 38 PM IST