Coromandel to pick up 73% in Sabero for Rs 450 crore

HYDERABAD: Fertiliser company Coromandel International will spend Rs 450 crore to pick up a 73% stake in Gujarat-based Sabero Organics, maker of crop protection chemicals, as it seeks opportunity beyond just the Government subsidy-fed traditional fertiliser business.

Coromandel, part of the $3.8 billion Murugappa Group, will purchase a 42.21% stake from Sabero's promoters for Rs 284 crore and, additionally, will make an open offer for a 31% stake. The deal would be funded through internal accruals - its cash reserves last year stood at Rs 1,500 crore. Coromandel plans to make an open offer in two days. It expects to get regulatory approval for the deal in three months.

Coromandel would buy 14.29 million shares of Sabero at Rs 160 a share and would also pay Rs 38.47 per share as non-compete fee to promoters. "The acquisition is part of the strategic plan of the company to grow its non-subsidy business, including the pesticide business in India and export markets," said A Vellayan, executive chairman, Murugappa Group. "The strategy is to derisk company's business by building a portfolio of subsidy and non-subsidy businesses,'' he added.

Sabero produces and supplies a variety of fungicides, herbicides, insecticides and specialty chemicals. In FY11, Sabero's turnover stood at Rs 413 crore, half of it coming from exports.