Agrochemicals firm Punjab Chemicals and Crop Protection (PCCPL) is once again on the prowl. The Mumbai-based PCCPL is in the final round of negotiations to acquire a 30% stake in PSD Chemicals, a privately-held firm in the US.
This will pave the way for the Indian company’s entry into the lucrative North American market. Sources close to the development said the stake deal could be worth Rs 100 crore.
Only a fortnight ago PCCPL announced the acquisition of the Netherlands-based Pegevo Beheer for Rs 225 crore. The deal will give the company a presence in Europe’s herbicides, insecticides and fungicides markets. Sources said that PCCPL has been eyeing the US market for some time and had finally identified PSD Chemicals as the potential target.
“PCCPL has a technological tie-up with PSD Chemicals and the acquisition of a strategic stake in the US company will take the relationship forward,” said sources. According to industry estimates, the size of agrochemicals market in North America at around $7 billion — the largest in the world.
When contacted, PCCPL managing director Shalil Shroff said, “We are scouting for acquisitions in the US and European markets. We are in negotiations with various firms so cannot comment on individual deals.” PCCPL is one of India’s leading manufacturers of basic chemicals used for industrial purposes and production of active ingredients in crop protection including insecticides, herbicides, fungicides.
Though the company has been tight-lipped on the financing of the acquisitions, sources said that PCCPL is considering a listing on the Luxembourg Stock Exchange. “Other options include issue of foreign currency convertible bonds worth $15 to $20 million,” they said. The Indian company’s stock was up 19.9% at Rs 142 on the BSE on Monday, as news of an imminent acquisition did the rounds of the market.
PCCPL sources close to the development said that a deal with PSD Chemicals is in the final stages. “A final agreement is likely to be singed next month,” they added. PSD Chemicals may initially act as a marketing and distribution arm of PCCPL in the US market. If the deal materialises, the acquisition will be the fifth major initiative that PCCPL has taken within a year. Late last year, the agrochemicals company had acquired Sintesis Quimica of Argentina for about Rs 50 crore. Later it formed a JV with the privately-held Viachem.
PCCPL’s aggressiveness follows the recent trend in the Indian agrochemicals industry. One of the leading companies, United Phosphorus has made as many as eight acquisitions in the last one year.
With its Pegevo Beheer acquisition, PCCPL entered the European market. Pegevo is organised as a holding company with different subsidiaries undertaking production, trading and facilities management activities. Pegevo (AgriChem) has a crop protection registration department, in-house R&D and quality control facilities and its own formulation facilities.
Source: Economic Times