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Sudarshan to acquire second largest global player in Pigments

ICICIdirect Research 18 Oct 2024 DISCLAIMER

Sudarshan chemicals has entered into a definitive agreement to acquire Germany-based Pigments major Heubach Group, in one of the largest outbound deals in the Indian Chemicals context.

For €127.5 million (~₹ 1180 crore), Sudarshan will get access to the assets which include 17 manufacturing sites in 11 countries, including four in India. Heubach recorded sales of €879 million in 2023 (₹ 8082 crore). The deal does not include Heubach debt

As such the deal is a kind of distress sale for Heubach which has filed for insolvency in a German court. Heubach in financial trouble due to its high-cost model worsened by energy crisis in the US.

The deal is in synch with the management’s aspirations to expand and improve its global portfolio which, at present is mainly into commoditized pigments. With Heubach acquisition the portfolio is expected to tilt towards Specialty pigments. 

Sudarshan plans to fund the deal via a mix of debt and equity. The plan is to achieve the combined entity EBITDA target of 12-15% with restructuring and product calibration.

Our TP is ₹ 1030 before the deal workings and we wait for funding and other integration modalities for target revision.

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