(Bloomberg) -- Yara International ASA agreed to buy Tata Chemicals Ltd.’s Babrala urea plant and distribution business in Uttar Pradesh, India, for $400 million, expanding its presence in the world’s second-largest fertilizer market.
The plant has an annual production of 0.7 million tonnes ammonia and 1.2 million tonnes urea and had sales of $350 million and earnings before interest, taxes, depreciation and amortization of $35 million in the financial year that ended March 31, Oslo-based Yara said. The plant, commissioned in 1994, is the most energy efficient plant in India, with energy efficiency “on a par with Yara’s best plants,” the company said.
“India has strong population growth and increasing living standards, and significant potential to improve agricultural productivity,” Svein Tore Holsether, president and chief executive officer of Yara, said in the statement.
The agreement will be subject to regulatory approvals and sanctioning by the relevant courts in India, a process which is expected to take 9-12 months.
Tata Chemicals’ shares reversed a loss to rise as much as 8.6 percent, the most since March 2014, and were up 6.6 percent as of 12:49 p.m. in Mumbai. Yara shares rose 0.6 percent as of 9:35 a.m. in Oslo.
The deal, which doesn’t include specialty products and complex fertilizers, will unlock for Tata Chemicals, strengthen its balance sheet and allow it to to pursue growth and opportunities in line with its strategy, the Mumbai-based company said in a separate statement.
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