Tata Chemicals, the world’s second largest soda ash maker, is to acquire British Salt, a soda ash raw material maker in the UK, for £93 million (Rs 660 crore).
The acquisition is being done through a holding company, Tata Chemicals Europe Holdings Ltd.
Tata Chemicals plans to close the deal within the next 30-35 days. The plan is to fund the acquisition through debt finance against the assets, on a non-recourse basis to Tata Chemicals, said P K Ghosh, executive director and chief financial officer.
British Salt owns brine wells (saturated water, with large amounts of a salt) in the UK, with a residual life of 50 years. The acquisition provides an opportunity to secure long-term brine supplies for Tata Chemicals’ subsidiary, Brunner Mond of UK, a manufacturer of soda ash (sodium carbonate) and other salt products, said executives at a press conference in Mumbai, today.
“This will help Brunner Mond maintain its low-cost manufacturing position in Europe and provides greater opportunity to optimise the costs further,” said R Mukundan, managing director, Tata Chemicals.
Tata Chemicals acquired Brunner Mond in 2006. It has factories in the UK and Magadi in Kenya. It is one of the largest producers of soda ash, refined sodium bicarbonate and calcium chloride liquor.
Tata Chemicals has a yearly capacity to manufacture 5.1 million tonnes of soda ash, next to Solvay, which produces 7.8 mt in a year. Soda ash is a vital raw material in the manufacturing processes of glass, detergents and industrial chemicals.
British Salt’s units are at Cheshire in Middlewich. It can produce 720,000 tonnes of salt products yearly. The annual revenue is £30-35 million.
Apart from the core business, British Salt is active in the gas storage business. It has a business model with potential to generate additional cash flows, said Tata Chemicals.
