Wadia group to acquire 25.1% stake in National Peroxide Ltd from their JV partner Solvay S.A. in an off market, inter-partner block transaction

Mumbai based global M&A advisory firm Singhi Advisors was the sole banker to the transaction

by Suman Gupta

National Peroxide Limited (NPL), part of the Wadia Group, who currently owns 45.4% shareholding and management control in the Company, have agreed to purchase additional 25.1 % stake in NPL from its JV partner-Solvay S.A. in an undisclosed value transaction, in an inter partner, off market block transaction, consolidating their holding in NPL to over 70%.

NPL, being a consistent profit-making, cash throwing company, is the largest domestic producer of Hydrogen Peroxide, having an all India market presence and significant market share of close to 45%. Having its manufacturing unit located at Kalyan, near Mumbai, NPL is the largest single location Hydrogen Peroxide manufacturer in India and has a fully integrated manufacturing facility, employing ultra-modern “Auto Oxidation” technology.

BACKGROUND : Solvay, being a global leader in performance and specialty chemicals, holds 25.1% in National Peroxide Limited (NPL), which it acquired indirectly through the acquisition of Interox Coordination more than 20 years ago. It also had a technology tie-up with NPL in the past which has since been fully absorbed and discontinued.

NPL was jointly promoted in the year 1956 by the flagship company of Wadia group-Bombay Burma Trading Corporations Ltd (BBTCL) and Laporte Industries, UK. Subsequently, Solvay joined hands with Laporte in the year 1970 and formed a joint venture company-Interox Coordination, which it acquired in 1972 and thus inherited 25.1% stake owned by Laporte Industries in NPL.

NPL, presently, under management control of the Wadia Group, is the largest domestic producer of Hydrogen Peroxide, with current capacity of 95,000 MTPA,(which it recently expanded from 84,000 MTPA to 95,000 MTPA), against the aggregate domestic manufacturing capacity of 2,19,500 MTPA and current demand of ~2,85,000 MTPA. The other major player in the industry is Gujarat Alkalis & Chemicals Ltd (GACL) with ~85,000 MTPA capacity. The current market demand for Hydrogen Peroxide is growing @7-8% p.a. and the demand gap is met thru imports. Hydrogen Peroxide is a clear, colorless liquid and a highly versatile chemical used in major industries like Textile Bleaching , Chemical Synthesis, Paper & Pulp and Metal Extractions etc.

Apart from owning a leading Hydrogen Peroxide business, NPL, through its treasury resources and surplus cash available also owns significant investments in valuable companies like Bombay Burma Trading Corporations (7.8%), Bombay Dyeing (0.9%) etc.

What Difference Singhi Made : Mumbai based global M&A advisory firm Singhi Advisors were sole advisors to Solvay S.A. in the transaction. Singhi played a significant role in strategizing and making respective approaches to accomplish the desired objective, in the best interests of the group.

Incidentally, in the past too, Singhi Advisors were the sole advisors for the divestment of polymer business of Agrochem major-PI Industries Ltd to Solvay (then Rhodia) and divestment of “Sunmica”-laminate business of Wadia group (Bombay Burma) to Aica Kogyo of Japan.

The transaction was led and executed by Singhi Advisors Managing Director, Mahesh Singhi.

About National Peroxide Limited : National Peroxide Limited (“NPL”) is engaged in manufacturing specialty chemicals like hydrogen peroxide, sodium perborate and hydrogen gas. The company is the largest single location hydrogen peroxide manufacturer in India and has a fully integrated, manufacturing facility at Kalyan, near Mumbai, employing ultra-modern auto-oxidation technology.

NPL, having recently expanded manufacturing capacity to 95,000 MTPA, is currently running at full capacity. In FY16 it sold around 96,846 MT as against aggregate domestic capacity of 219,500 MTPA (present operational capacity is 201,500 as Asian Peroxide plant has ceased production recently). NPL manufactures Hydrogen Peroxide of varying concentration (35% w/w, 50% w/w & 60% w/w), distilled Hydrogen Peroxide (50% w/w & 70% w/w) and Sodium Perborate, catering to Textiles, Chemicals & Paper industries.

About Solvay : Solvay is a multi-specialty chemical company, committed to developing chemistry & innovates and partners with customers in diverse global end markets. Its products and solutions are used in planes, cars, smart and medical devices, batteries, in mineral and oil extraction, among many other applications promoting sustainability.

Solvay develops high added-value, innovative, sustainable and competitive solutions, tailored to the demands of its end customers for the following markets: Aeronautic & automotive, Agro food, Building & construction, Consumer goods & healthcare, Electrical & electronics, Energy & environment, Industrial applications

Its light-weighting materials enhance cleaner mobility, its formulations optimize the use of resources and its performance chemicals improve air and water quality. Solvay is headquartered in Brussels with presence across 58 countries. Its Net sales were €11 billion in 2016, with 90% from activities where Solvay ranks among the world’s top 3 leaders.