The Board of Directors of Akzo Nobel India Limited has, at its meeting held today, recommended the sale of Company’s Specialty Chemicals Business (the ‘Business’) as a going concern to an affiliate of the AkzoNobel Group, subject to the approval of the shareholders. The total consideration to be received from this sale will be Rs 3,200 million, subject to adjustment for working capital and for an economic effective date of 1 January 2018.
The Business includes the Mahad manufacturing facility for Polymer Chemistry range of products (which was merged with the Company in 2012 at an implied Enterprise Value of Rs 960 million). The Business also handles a Trading portfolio in Polymer and Surface Chemistry products sourced from other units of AkzoNobel. About 80 employees, currently working with the Business, will also transfer with the Business.
In the year ended 31 March 2017, the Business recorded revenue of Rs 2,641 million and segment profit of Rs 215 million. During the six months ended 30 September 2017, the revenue from the segment was Rs 1,153 million and profit was Rs 41 million (This represents 7.7% of Revenue and 3.6% of PBT of Akzo Nobel India Limited).
Akzo Nobel NV (‘AkzoNobel’) announced in April 2017 its intention to separate its Specialty Chemicals Business from its Paints and Coatings Business to create two focused and separate businesses. The Specialty Chemicals Business of Akzo Nobel India Limited is closely integrated with the global Specialty Chemicals Business of AkzoNobel. Given this interdependency, the Board of Directors believes it will be in the best interest of the shareholders, concerned employees and customers that the India Specialty Chemicals Business is also divested to the said Specialty Chemicals global entity or its affiliate.
The transaction is likely to be completed by 31 March 2018, after obtaining the approval of Akzo Nobel India’s shareholders through Postal Ballot and other statutory approvals as may be required.