Tata Chemicals completes acquisition of General Chemical Industrial Products

27 March 2008

Just a day after Tata Motors announced its acquisition of Jaguar and Land Rover from Ford Motors', another Tata Group company, Tata Chemicals, India's largest soda ash maker, has completed its acquisition of the US-based General Chemical Industrial Products Inc  (GCIP), less than two months after having signed a definitive agreement to acquire it for $1.005 billion.

To fund the acquisition, Tata Chemicals has raised $850 million comprising a $500 million seven-year loan at 1.35 percentage points over LIBOR and a $350 million in six-month bridge loan, through a consortium comprising ABN AMRO, Bank of Nova Scotia, Calyon, HSBC, Mizuho Financial Group, Rabobank  and Standard Chartered.

GCIP, is among the top five global soda ash producers with interests in mining, and its acquisition catapults Tata Chemicals to the world's second largest soda ash maker with a  combined global capacity of 5.5 million tonnes per annum.

Tata chemicals  is currently the world's third-largest soda ash maker with a combined 3-million tpa capacity from four plants - one in India and the others abroad.

The acquisition of GCIP also enables Tata Chemicals to make over 50 per cent of its soda ash through the natural route, which is not only more economical for making soda ash but is also immune to commodity cycles as the US firm's subsidiary, General Chemical (Soda Ash) Partners (GCSAP), is a significant soda ash producer in the US with a capacity of 2.5 million TPA of natural soda ash.

''I am delighted at the speed and smoothness with which this deal was completed." said Homi Khusrokhan, managing director, Tata Chemicals. "The Company's global scale, spread and presence in natural soda ash will be of great strategic advantage to us in the years ahead."

One of the few global makers of natural soda ash, GCSAP has mining and manufacturing facilities located at Green River Basin in Wyoming in the US, which provides it access to the world's largest and most economically recoverable trona ore deposits that is then converted into natural soda ash.

The Green River facility comprises an underground trona mine where GCIP mines 4.5 million tonnes of ore annually and a 2.5-million tpa surface refining plant. The company owns a majority 75 per cent stake in the facility in partnership with OCI Chemical Corporation, FMC Corporation and Solvay Mineral.