Tomco-Hll Merger
Mumbai: Tata Chemicals, a Tata group company, and Hindustan Lever’s (HLL) Hind Lever Chemicals (HLCL) are merging together to form what would be the second-largest fertiliser company in India.
This is the third time that the Tatas and HLL are coming together and this time it is in the fertilisers and chemicals businesses. Previously the two came together in the Hindustan Lever-Tomco deal in 1993 and Lakme-Lever in 1998.
The Tatas hold 30 per cent and financial institutions hold 26 per cent stakes in Tata Chemicals. HLL holds 50-per cent stake in HLCL and the institutional holding is at over 9 per cent as on 31 December 2002.
The boards of the two companies are meeting separately on 24 January 2003 to ratify the merger and the share-swap ratio.
Sources close to the deal reveal that the valuation of Tata Chemicals is much higher than HLCL’s, hence the latter’s shareholders will be issued shares of the Tata group company. Analysts estimate the share-swap ratio will be in the range of 2.5 to 3:1 — that is, 2.5 to three shares of Tata Chemicals for every share of HLCL held.
The analysts say the merger between the two companies makes good business sense given its complementary qualities. The Rs 1,516-crore Tata Chemicals manufactures soda ash, salt and fertiliser. Its fertiliser production primarily comprises urea.
The Rs 1,285-crore HLCL’s fertiliser business covers di-ammonium phosphate (DAP) complex NPK fertilisers and single super phosphate (SSP). With this merger Tata Chemicals will be present in all fertiliser product categories such as urea-ammonia, NPK and DAP and will also assume a leadership position in soda ash, salt and fine chemicals.
Post-merger, Tata Chemicals will have an estimated turnover of about Rs 2,750 crore, profits of over Rs 170 crore and reserves of over Rs 1,600 crore.
Sources say HLL, which holds a 50-per cent stake in HLCL, will see its holding dip to under 10 per cent while that of the Tatas in Tata Chemicals may go down to
This is the third time that the Tatas and HLL are coming together and this time it is in the fertilisers and chemicals businesses. Previously the two came together in the Hindustan Lever-Tomco deal in 1993 and Lakme-Lever in 1998.
The Tatas hold 30 per cent and financial institutions hold 26 per cent stakes in Tata Chemicals. HLL holds 50-per cent stake in HLCL and the institutional holding is at over 9 per cent as on 31 December 2002.
The boards of the two companies are meeting separately on 24 January 2003 to ratify the merger and the share-swap ratio.
Sources close to the deal reveal that the valuation of Tata Chemicals is much higher than HLCL’s, hence the latter’s shareholders will be issued shares of the Tata group company. Analysts estimate the share-swap ratio will be in the range of 2.5 to 3:1 — that is, 2.5 to three shares of Tata Chemicals for every share of HLCL held.
The analysts say the merger between the two companies makes good business sense given its complementary qualities. The Rs 1,516-crore Tata Chemicals manufactures soda ash, salt and fertiliser. Its fertiliser production primarily comprises urea.
The Rs 1,285-crore HLCL’s fertiliser business covers di-ammonium phosphate (DAP) complex NPK fertilisers and single super phosphate (SSP). With this merger Tata Chemicals will be present in all fertiliser product categories such as urea-ammonia, NPK and DAP and will also assume a leadership position in soda ash, salt and fine chemicals.
Post-merger, Tata Chemicals will have an estimated turnover of about Rs 2,750 crore, profits of over Rs 170 crore and reserves of over Rs 1,600 crore.
Sources say HLL, which holds a 50-per cent stake in HLCL, will see its holding dip to under 10 per cent while that of the Tatas in Tata Chemicals may go down to