Grasim Industries plans to buy 40% stake in Canadian company

Mumbai: Kumar Mangalam Birla-led Grasim Industries Ltd will buy a 40% stake in Canada’s Terrace Bay Pulp Mill for $44 million (around Rs 242 crore) and spend a further $250 million to upgrade and expand the plant, the Indian fibre and cement maker said in a statement on Thursday.

The remaining 60% stake will be held by Thai Rayon Public Co. Ltd.

The transaction is subject to court approvals in Canada as well as other regulatory nods in Canada, Thailand and India—a process Grasim expects to complete by 31 July.

Birla called the acquisition “a major strategic move” in the viscose staple fibre (VSF) business; the Aditya Birla group that he heads is the world’s largest producer of VSF with a 21% global market share.

“To sustain ongoing growth, we have an integrated business model spanning the entire value chain from plantation to pulp to fibre,” Birla said in the statement. “The Terrance Bay Mill, upon conversion, will be geared to provide superior quality pulp for our VSF plants worldwide.”

The latest purchase will add to the group’s presence in Canada through its various companies—AV Nackawic and AV Cell in the pulp and fibre business, Aditya Birla Novelis in the metals business, Aditya Birla Minacs in the information technology-enabled services business, and Columbian Chemicals in the carbon black business.

Birla has been on a shopping spree across sectors, making this his third purchase in four months.

On 18 May, the financial services-to-telecom and retail conglomerate decided to buy a 27.5% stake in Living Media India Ltd, which publishes the India Today and Business Today magazines, marking a fresh bid to enter the media industry. It did not disclose the deal size. Birla had then said that media was “a sunrise sector from an investment point of view”.

About a month before that, on 30 April, the conglomerate with $35 billion in revenues bought a majority stake in the Pantaloon retail chain from the debt-laden Future Group for Rs 1,600 crore. The deal gave a breather to the Kishore Biyani-promoted company to square off its debts; Birla’s retail operations got a huge branded presence.

Grasim lost 0.73% to close at Rs 2,659.80 a share on Thursday on BSE, on a day the benchmark index Sensex rose 0.43% to 17,538.67 points. The announcement was made after trading hours.

bhuma.s@livemint.com