Ahmedabad-based Kiri Dyes and Chemicals Ltd (KDCL) is in the process of acquiring DyStar Group - the global leader in dyes and dyes solution with 21 % market share - for 1 Euro. However, this will be a small consolation for KDCL as it will have to invest close to Rs 850-900 crore for re-paymemt of debt and restructuring of the company, said sources close to the development.
The move will be a huge leap forward for Kiri Dyes putting it in the league of companies with a billion dollar turnover, sources added. DyStar clocked sales of Rs 5,500 crore in 2008 calendar year.
Dystar is owned by Platinum Equity LLP. KDCL has expressed intent to acquire Dystar and has executed an MoU with Platinum Equity Advisors to this effect.
"KDCL proposes to buy Platinum Equity’s holding in Dystar for a consideration for Euro 1 only. However, KDCL shall also assume existing Dystar liabilities," industry sources privy to the development told Business Standard.
KDCL announced on the Bombay Stock Exchange today that the company, through its SPV Kiri Holding Singapore Private Ltd has executed purchase agreement on Friday, December 4, subject to necessary approvals under Laws of Germany. The agreement is for acquiring the DyStar Group and its selective assets through insolvency, it said.
DyStar has 18 production facilities in 12 countries with a total employee stength of around 3,500. DyStar has filed for insolvency for its sites in Frankfurt, Leverkusen, Brunsbuttel, Geretsried, and Ludwigshafen.
Kiri Dyes and Chemicals is aiming to a part of the amount for debt repayment through qualified institutional placement. The balance amount required for acquisition through a mix of equity and funding through a special purpose vehicle, said sources.
KDCL’s existing bank consortium for the deal includes State Bank of India, Bank of India, EXIM Bank, Corporation Bank.
When contacted, a senior company official said that they are waiting for German government approval and hope to close the deal by January end.
DyStar Group, Germany is a global market leader for dyes, dyes solutions, leather, performance chemicals, new technologies and custom manufacturing of speciality dyes and pigments with 21 per cent market share globally.
It provides high quality products and services across the whole value chain in various sectors like apparel, hosiery, automotive, carpets and industrial fabrics. As part of restructuring, KDCL will shift the headquarters of DyStar from Germany to Singapore.
The share price of Kiri Dyes today touched a 52 week high of Rs 657.35. The share rose by Rs. 54.05 from yesterday's close of Rs. 603.30 per share.
