Ge­n­e­sis En­ergy Beats Nirma to Buy US’ Tronox Al­kali

An­titrust con­cerns said to have spoilt co’s chances of mak­ing its largest over­seas deal

The Economic Times - - Companies: Pursuit Of Profit - Our Bu­reau

Mumbai: US-based Ge­n­e­sis En­ergy agreed to buy Tronox’s al­kali busi­ness, the world’s largest pro­ducer of nat­u­ral soda ash, for about $1.3 bil­lion (`8,463 crore) in cash to ex­pand into the chem­i­cals sec­tor, beat­ing Nirma in a closely fought race. Even though Nirma’s bid was be­lieved to be higher, an­titrust con­cerns spooked the In­dian firm’s chances of mak­ing its largest cross border ac­qui­si­tion, sources said. Nirma would be se­cond time un­lucky in as many years, hav­ing lost out on a sim­i­lar op­por­tu­nity in 2015 to ac­quire the same as­set from the Amer­i­can com­pany.

ET on July 24 had re­ported that Nirma was a key con­tender for Tronox Al­kali, lo­cated at Green River, Wy­oming, with a po­ten­tial $1.5-2 bil­lion of­fer.

In a for­mal state­ment is­sued on Thurs­day, Ge­n­e­sis said it would raise about $750 mil­lion through a con­vert­ible pre­ferred units is­sue to fund the deal. The com­pany has re­ceived fund­ing com­mit­ments from in­vest­ment ve­hi­cles af­fil­i­ated with KKR Global In­fra­struc­ture In­vestors II LP and GSO Cap­i­tal Part­ners LP.

Tronox’s al­kali busi­ness pro­duces about 28% of the world’s nat­u­ral soda ash out­put. Soda ash, or sodium bi­car­bon­ate, is used in the mak­ing of glass, baked goods, de­ter­gents and a va­ri­ety of other in­dus­trial chem­i­cals and prod­ucts. It pro­duces soda ash from two op­er­a­tions in the Green River area of Wy­oming, em­ploy­ing about 1,000 peo­ple and gen­er­at­ing $800 mil­lion in rev­enue.

The busi­ness was orig­i­nally part of the soda ash op­er­a­tions of FMC Corp, which ran it for 65 years as a core part of its sprawl­ing busi­ness. It di­vested the unit in 2015 to Tronox for $1.64 bil­lion. Nirma made an un­suc­cess­ful bid for the busi­ness at the time, ex­perts said.

Nirma is among the world’s big­gest soda ash pro­duc­ers along with Tata Chem­i­cals, Solvay, Ciner Group, Tronox and China’s Huanghua Tianxin Chem­i­cal In­dus­try. The In­dian com­pany has been present in the US nat­u­ral soda ash mar­ket since Novem­ber 2007 when it ac­quired Sear­les Val­ley Min­er­als (SVM) and its three man­u­fac­tur­ing units in Cal­i­for­nia for $200 mil­lion. SVM was among five nat­u­ral soda ash man­u­fac­tur­ers in the US and if Nirma were able to ac­quire Tronox, it would have put Nirma among the world’s top seven pro­duc­ers of the chem­i­cal.

Credit Suisse is act­ing as fi­nan­cial ad­viser to Tronox. Citi and Lazard were the ad­vis­ers to Nirma.


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