Specialty chemicals company Rossari Biotech said it will buy Unitop Chemicals Private for Rs 421 crore ($57.7 million) in an all-cash deal. Rossari will initially buy 65% of Unitop and the remaining 35% will be acquired over the next two years.
It plans to fund the acquisition through cash on its balance sheet and it did not intend to raise any debt for the deal, the Mumbai-based company said in a statement.
The deal will help Rossari expand its product portfolio and dive deeper into the speciality chemical segments, providing it larger international and domestic exposure.
“The combination of Unitop Chemicals with Rossari will augment the quality and acceleration of the company’s growth going forward,” Rossari said.
In a bid to strengthen its balance sheet, the company concluded a preferential issue of equity of Rs 300 crores in April this year.
“We are delighted to accelerate the growth momentum at Rossari. Unitop Chemicals is a natural fit with our operations and brings with it immense synergies and complementary growth dimensions,” Edward Menezes, promoter and executive chairman and Sunil Chari, promoter and managing director said.
“We are excited to drive faster growth with larger revenues, greater technological capabilities, stronger spread of market presence, well-aligned operating segments, and most importantly, a more experienced talent pool with augmented capabilities”, Menezes and Chari added.
Rossari went public in July last year, marking the first IPO since India went into a lockdown in late March to control the Covid-19 pandemic. Prior to that, Rossari had raised Rs 100 crore in a pre-IPO round by allotting shares to eight institutional investors including private equity and hedge funds.
The company was originally incorporated as a partnership firm, Rossari Labtech, in March 2003. It makes specialty chemicals used as raw material in the FMCG, apparel, poultry and animal feed industries. Unitop is one of India’s oldest manufacturers of specialty surfactants, emulsifiers, and other specialty chemicals. It also exports to over 25 countries. In the fiscal year 2020, Unitop Chemicals’ revenues stood at Rs. 280 crores, with adjusted EBITDA at Rs. 43 crore. Its 2021 unaudited estimated revenues stood at over Rs. 300 crores.
The company has a healthy balance sheet profile with zero net debt, Rossari said.
Wodehouse Capital acted as the financial advisor to Unitop Chemicals, whereas Axcelus Finserv Private Ltd advised Rossari and Shardul Amarchand Mangaldas acted as its legal counsel.