Nihon Nohyaku, a Japanese fine chemicals maker has acquired around 76% stake in Hyderabad Chemicals Ltd. in a Rs 450 crore transaction, three people with knowledge of the development said. The transaction is yet another instance of the growing interest from Japanese corporations to have base in India.
Tokyo-listed Nihon Nohyaku will get a large Indian base along with the technical know-how that Hyderabad Chemicals has developed over the last three decades. The company announced its acquisition on the Tokyo Stock Exchange on Thursday.
“The promoters Shroff family has sold around 74% stake in the company to Nihon. The promoters will continue to manage the company alongwith members of Nihon,” a person involved in the deal said.
Promoted by Shroff Family of the Excel Shroff Group, Hyderabad Chemicals is being valued at around Rs 620 crore.
The company that manufactures technical grade pesticides and pesticides formulations. The company has a large research and development division that helped Nihon zero in on it, investment bankers privy to the transaction say. For the financial year ended 31 March, 2014, the company had a turnover of $65 million.
“Generally, agrochemical companies are valued at 1.5-2.5 times their earnings,” a banker said on condition of anonymity.
While KPMG advised Nihon on the transaction, EY’s M&A Advisory team was the exclusive financial advisor to Hyderabad Chemicals Ltd.
The Rs 100 billion agrochemical industry in India is one of the largest market in Asia and is expected to attract many more multinational companies to come hunting for mergers and acquisitions, say experts. “This deal will pave way for further consolidation in the industry. Since India is a big market with good assets with sound technical knowhow and cost advantage are available, we will see a large number of global companies coming to India in near term,” a consultant said.
