Genesis Energy Beats Nirma to Buy US’ Tronox Alkali
Antitrust concerns said to have spoilt co’s chances of making its largest overseas deal
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.