Jan. 31: The Aditya Birla Group on Monday announced its first large overseas acquisition after the Hindalco-Novelis deal in early 2007, before the financial crisis.
The group will acquire a controlling stake in Atlanta-based Columbian Chemicals Company (CCC), a manufacturer of carbon black — a chemical used in manufacture of tyres, rubber, inks and paints. The total value of the deal is $875 million. The Aditya Birla group has purchased the stake via three associate firms Alexandria Carbon Black, Thai Carbon Black and SKI Investment.
The acquisition should be completed by mid-2011, said Mr Kumar Mangalam Birla, chairman, Aditya Birla Group. “We have been number 4 in carbon black (globally) so far with 0.9 million tonnes of capacity. With 1.1 million tonnes (from Columbian), we become the number 1 player,” Mr Birla said in Mumbai.
The acquisition will give the group a foothold in North America, Brazil, Korea, China and Europe completing a global footprint, he added. Three Birla group entities will pick up stakes in CCC, which will continue to exist as a separate firm.
The synergies — or the savings arising from the increased scale — are being pegged at $50 million/year. CCC, which is a privately held company, had incurred a loss in the last reporting period.
“There is an overcapacity in the carbon black business globally, so it makes sense to acquire rather than set up new capacity,” said Mr Santrupt Mishra, CEO, Birla Carbon. The size of the carbon black industry globally is 14.26 million tonnes.
Interestingly, Evonit, which was the world’s largest carbon black manufactuer prior to this transaction, was also on the block and was being evaluated by the Birla Group as a possible acquisition. Those negotiations have been now called off.