Rallis India-Tata Chemicals merger in the offing : Analysts

The Tata Group is mulling merger of pesticide-maker Rallis India with its agro-chemicals flagship Tata Chemicals.

According to sources familiar with the developments, the merger under consideration would take some time to frame since both companies are listed on Indian markets. The companies share some common business lines that would make for leveraging synergies in terms of complementary products.

The sources add that the merger would target a 15 to 20 per cent cut in Rallis' raw material, employee, logistics and other operational costs.

In response to a query on the merger, Tata Chemicals said it has made an offer to up its stake in equity holding in Rallis India that will see it buy equity shares from other qualifying promoter-group companies through an inter-se transfer of shares.

The company said since the transaction had not yet been completed it would not speak about it for the moment.

The move was approved on 12 August by the Tata Chemicals board and a proposal was cleared to buy up to 35.8 per cent in Rallis through share transfers from promoter group companies at a price not exceeding Rs850 a share. Analysts put the cost of acquisition at around Rs320 to Rs360 a share.