In the latest speciality chemicals deal, Switzerland-based Clariant International will enter into a joint venture with India Glycols as a 51% partner.
India Glycols will transfer its renewable bio-ethylene oxide derivative products business to the joint venture, called IGL Green Chemicals. The unit will include a multi-purpose production facility in Uttarakhand.
Clariant will pay Rs 587.7 crore (around $80.7 million) for the deal.
There will be a lock-in of seven years for both Clariant and India Glycols. Call and put options are also in place following the expiry of this lock-in for the stake held by India Glycols.
Also, during the term of the joint venture, Clariant and India Glycols shall not compete with the unit according to the agreement. India Glycols will not compete with IGL Green Chemicals for a further three years after it ceases to be a shareholder.
EY acted as the exclusive financial advisor to the transaction.
India Glycols says it has also agreed to a long-term supply agreement with IGL Green Chemicals for ethylene oxide, which is made from bio-ethanol.
The development comes after reports last month suggested that Clariant would acquire a 51% stake in India Glycols’ speciality chemicals business. India Glycols also operates in the natural active pharmaceuticals and nutraceuticals segments.
Shares of India Glycols were trading 7.53% down at Rs 535 apiece at the time of writing this report. The company reported consolidated net sales and profit of Rs 5,972.65 crore and Rs 114.66 crore, respectively, for the 2019-20 financial year.