Tata Chemicals To Sell UP Plant To Yara International For $400 Million
Tata Chemicals said the divestment is in line with the 'strategic direction' of the company to strengthen its fertiliser businesses by partnerships, transfer of ownership to world class companies
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Tata Chemicals Ltd will sell its Babrala urea plant and distribution business in Uttar Pradesh to Norway's Yara International ASA for $400 million, giving the European company a significant presence in the world's second-largest fertilizer market.
The plant has an annual production of 0.7 million tonnes ammonia and 1.2 million tonnes urea, and generated revenues and EBITDA of respectively $350 million and $35 million in the financial year ended 31 March 2016, Yara said.
The plant was commissioned in 1994, and is the most energy efficient plant in India, with energy efficiency on a par with Yara's best plants, the Norwegian company said.
"This acquisition represents another significant step in our growth strategy, creating an integrated position in the world's second-largest fertilizer market. India has strong population growth and increasing living standards, and significant potential to improve agricultural productivity," Svein Tore Holsether, President and Chief Executive Officer of Yara, said in a statement.
Tata Chemicals said the divestment is in line with the "strategic direction of the company to continue to strengthen the fertiliser businesses by partnerships and/or
transfer of ownership to world class companies."
The urea business will now have the benefit of international network of Yara and its global expertise, said Tata Chemicals, which will continue to own the brands Paras, TKS and Daksha.
The deal with Yara does not include specialty products and complex fertilisers.
The agreement will be subject to regulatory approvals in India and the process could take take 9-12 months.