-- Gulf Oil to make acquisition from U.S. private equity
fund
-- Acquisition will lead to synergy between both companies
-- Acquisition subject to conditions
NEW DELHI--India's Gulf Oil Corp. (506480.BY) on Wednesday said
it has agreed to acquire U.S.-based specialty chemicals maker
Houghton International Inc. from a private-equity fund for about
$1.05 billion.
The purchase -- the largest overseas acquisition by an Indian
company so far this year-- will be carried out by a wholly -owned
U.K. unit, the Hyderabad-based company said.
The agreement for the transaction with AEA Investors LP was
signed Tuesday but the takeover is subject to certain conditions,
Gulf Oil said, without elaborating.
It added that Houghton will continue to operate as a separate
company after the deal is completed.
"The acquisition fits very well with Gulf's lubricant
portfolio," the company said in a statement.
It added that its range of automotive lubricants will complement
Houghton's portfolio of industrial chemicals.
The acquisition will allow Gulf Oil, part of the diversified
Hinduja Group, to expand its lubricants and chemicals business
worldwide.
Indian companies have been increasingly looking overseas for
acquisitions because red tape, corruption and land acquisition
issues often hurt plans to expand at home.
Founded in 1865, Houghton is a maker of metal working fluids
used for metal processing applications including cutting and
stamping. The company has 12 manufacturing facilities in 10
countries and reported sales of $858 million for the year ended
Sept. 30, and an adjusted EBITDA of $132 million, the Gulf Oil
statement said.
The diversified, family-controlled Hinduja Group's businesses
range from truck and bus maker Ashok Leyland to IndusInd Bank.
It is controlled by Chairman Srichand Hinduja and his brothers,
Prakash P. Hinduja, Gopichand Hinduja and Ashok Hinduja. The
Hinduja brothers have a net worth of $8 billion and are India's 9th
richest, according to Forbes.
"There will be a lot of synergy. Gulf Oil is into the lubricants
business and this acquisition helps it expand," Prakash Hinduja
told Dow Jones Newswires on the sidelines of the World Economic
Forum.
Mr Hinduja didn't say how Gulf Oil will finance the
purchase.
Gulf Oil shares declined as much as 2.3% on the news. They were
1.08% lower at 86.65 rupees ($1.6) in afternoon trading on the
Bombay Stock Exchange, underperforming a 0.46% rise in the
benchmark index.
Gulf Oil had consolidated revenue of 13.28 billion rupees
($245.4 million) for the year ended March 31.
It said its operations will be able to leverage Houghton's
extensive base of industrial customers to offer them a complete
end-to-end range of lubricants and in addition there are various
synergies that can be achieved in manufacturing strategic sourcing
and distribution.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
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