Tata Chemicals spends Rs 1,387 crore to acquire remaining stake in US subsidiary

Tata Chemicals, the third largest producer of soda ash in the world, today acquired the 25 per cent remaining stake in its US subsidiary, Tata Chemicals North America (TCNA).

The company said its wholly-owned subsidiary Valley Holdings has acquired the remaining 25 per cent partnership interest in Tata Chemicals (Soda Ash) Partners Holdings (which owns TCNA) from the Andover Group, a subsidiary of Owens-Illinois, for $195 million (nearly Rs 1,386.7 crore).

"With this transaction Tata Chemicals will have full ownership of the North American business and will further simplify enterprise architecture," said R Mukundan, Managing Director and CEO, Tata Chemicals.

The North American soda ash business had reported revenues of Rs 886 crore last year, up by 3 per cent from the previous year, due to improved sales volumes and better sales realisation. Tata Chemicals, which is now focussing its Basic Chemistry (soda ash, sodium bicarbonate and salt manufacturing) business and Specialty Chemicals (agro sciences, nutritional sciences, material sciences and energy) businesses, had consolidated revenues of Rs 11,296 crore in 2018-19, 80 per cent of which were from the Basic Chemistry segment. The company is demerging its consumer focussed business and is entering into new segments like lithium-ion batteries. As of March 2019, its net debt was only Rs 1,959 crore, unlike many other Tata group companies.

Soda ash is a key ingredient in making detergents, chemicals, flat glass, container glass, paper, textiles etc.

On March 27, 2008, TCNA (then General Chemical Industrial Products) was acquired by Tata Chemicals for over $1 billion for 75 per cent stake. It subsequently became a wholly-owned subsidiary of Valley Holdings. The acquisition was to boost its total soda ash capacity to 5.5 million tonnes a year, from 3 million tonnes. TCNA operates a soda ash manufacturing facility with annual capacity of 2.5 million tonnes in Green River, Wyoming, a region that holds the world's largest reserve of natural soda ash. In 2005, Tata Chemicals had acquired UK's Brunner Mond Group for $220 million to have soda ash manufacturing capabilities in Europe and Africa.

"We will continue to invest in our Green River facility to meet market demand and serve our customers globally," said Mukundan.

At present, Tata Chemicals is increasing its soda ash manufacturing capacity at Mithapur in Gujarat from 0.8 million metric tonnes to 1 million metric tonnes.

The list of world leaders in soda ash manufacturing includes companies like US-based Ciner Resources Corporation, Solvay and Indian companies like Tata Chemicals and Nirma. Reportedly, a couple of years ago, Nirma tried to acquire Tronox Alkali, the fourth largest producer of soda ash in the world, in the same region of Green River, Wyoming. But, Tronox was acquired by US-based Genesis Energy.

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