The Wall Street Journal-20080201-Buy It All- Another Merger for India-s Tata

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Buy It All? Another Merger for India's Tata

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NEW DELHI -- In the latest sign of the global ambitions of Tata Group as well as other Indian corporate buyers, its Tata Chemicals Ltd. unit said it agreed to buy soda-ash maker General Chemical Industrial Products Inc. of the U.S. for $1.01 billion.

Tata Chemicals, which is 30%-owned by the Tata Group, produces inorganic chemicals, fertilizers, food additives, and is a large producer of soda ash. Soda ash is used for making glass and in powdered detergents, among other things.

General Chemical Industrial Products is majority owned by the Harbinger Capital Partners hedge fund, a New York investment firm that is part of Harbert Management Corp. of Birmingham, Ala. A spokesman for Harbinger Capital Partners declined to comment.

The deal comes as the Tata Group, India's flagship conglomerate, is increasingly looking beyond India to buy companies.

Tata Steel Ltd. agreed to buy Anglo-Dutch steel company Corus Group PLC last year for around GBP 6.2 billion, or about $12 billion. Tata Motors Ltd., which recently brought out a new small car that will retail for $2,500, is the preferred bidder to buy the Jaguar and Land Rover brands from Ford Motor Co., a deal expected to be unveiled in coming weeks.

Indian companies are becoming bigger players in global mergers and acquisitions.

Thomson Financial calculates that Indian companies did outbound cross-border deals valued at $22.5 billion last year and $24.7 billion in 2006, up from $3.6 billion in 2005.

Companies here have been dealt a strong hand by India's booming economy and the rupee's gain against the dollar. Last year, the rupee rose more than 12% against the U.S. currency.

"This is a timely acquisition from an Indian viewpoint," said Homi Khusrokhan, Tata Chemicals managing director, in a meeting with reporters. "We are picking up a U.S. asset at a time when the Indian rupee is strong."

The deal will make Tata Chemicals one of the world's biggest soda- ash producers and give it access to markets in North America, Latin America and the Far East, complementing its existing markets, Tata Chemicals said. General Chemical Industrial Products' soda-ash business has mining and manufacturing facilities at Green River Basin, Wyoming. The business Tata is buying has annual revenue of close to $400 million.

Indian companies are expected to continue snapping up firms overseas despite the slowdown in the U.S. economy, which is forecast to take a toll on India's economic growth as well.

"There are many strong companies in India, and they are going to have the ability to continue to do cross-border M&A," said Prahlad Shantigram, managing director of corporate finance at Standard Chartered Bank in Mumbai. "If a deal makes economic sense, there will continue to be M&A." Standard Chartered Bank was one of the advisers on the purchase.

Still, investors appeared wary.

Tata Chemicals shares closed down 7.3% at 305 rupees ($7.76) apiece on the Bombay Stock Exchange, underperforming the broader market. India's benchmark Sensex index shed 0.6% to 17648.71.

Tata Chemicals has four soda-ash facilities, in India, the U.K., the Netherlands and Kenya. The facilities outside India were acquired as part of its 2005 purchase of Brunner Mond Group Ltd. of the U.K.

The new deal remains subject to shareholder and regulatory approvals and the company didn't give a time frame for closing it.

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Raghavendra Upadhyaya, Rumman Ahmed and Vibhuti Agarwal contributed to this article.