Pidilite to acquire Huntsman's adhesives biz in India for Rs 2,100 cr

Pidilite Industries, manufacturer of the popular Fevicol brand of adhesives and sealants, on Thursday said it will acquire the US-based Huntsman Group's adhesives business in the country for Rs 2,100 crore in an all-cash deal that values the seller at 15 times its operating profit.

Pidilite Industries, manufacturer of the popular Fevicol brand of adhesives and sealants, on Thursday said it will acquire the US-based Huntsman Group's adhesives business in the country for Rs 2,100 crore in an all-cash deal that values the seller at 15 times its operating profit. The Woodlands, Texas-headquartered Huntsman Corporation operates the 100 per cent subsidiary in the country -- Huntsman Advanced Materials Solutions -- which directly competes with Fevicol as it also into manufacturing and selling adhesives, sealants and other products under the Araldite, Araldite Karpenter and Araseal labels

"We've entered into a definitive agreement to buy the consumer and bazaar business of Huntsman Advanced Materials Solutions for Rs 2,100 crore in an all-cash deal. "The cash consideration excludes customary working capital and other adjustments, subject to certain preconditions being met prior to the closing of the transaction. The agreement was signed last night," Pidilite Industries said a statement. Huntsman, in a late evening statement, said after the sale of the adhesives business to Pidilite, it will continue to operate other businesses such as polyurethanes, textile effects and advanced materials industrial business. The transaction with Pidilite is for its do-it-yourself (DIY) consumer adhesives business, which is part of Huntsman's advanced materials division in an all-cash transaction valued at up to USD 285 million, excluding customary working capital and other adjustments.  The deal values the Huntsman's Indian arm's at 15 times the EBITDA.  The deal also includes Huntsman's Indian Subcontinent business, apart from trademark licence for the Middle East, Africa and ASEAN countries, Pidilite added. Huntsman will receive around USD 257 million in cash at closing and up to USD 28 million of additional cash under an earn-out within 18 months if the business achieves sales revenue in-line with 2019, its chairman Peter Huntsman said. On the reason for sale, he said, "We have this business from almost nothing and today we are a market leader. But to take it to the next level of size and value, we simply do not have the footprint in India to do so." Fevicol is synonymous with adhesives in the domestic market. Pidilite's other major brands include MSeal, Fevikwik, Fevistik, Roff, Dr.Fixit, Fevicryl, Motomax and Hobby Ideas. Huntsman had a revenue of around Rs 400 crore in 2019 from its India operations. The transaction is expected to close by next week. "With this acquisition, Araldite will add to the already very strong portfolio of our adhesives and sealants and will complement our retail portfolio. We are confident that this acquisition will create significant shareholder value through strong revenue and cost synergies," Pidilite Managing Director Bharat Puri said. Apurva Parekh, executive director at Pidilite, said Araldite is an iconic brand and a market leader in epoxy adhesives in the country. Pidilite is the market leader in adhesives and sealants, construction chemicals, craftsmen products, DIY products and polymer emulsions in the country. It also sells paint chemicals, automotive chemicals, art materials and stationery, maintenance chemicals, industrial adhesives, industrial, textile resins and organic pigments and preparations. Reacting to the deal, the Pidilite counter rallied over 5 per cent to close at Rs 1,595 on the BSE while the benchmark closed in the red with a 0.43 per cent loss.