Tata Chem buys U.S. soda ash maker for $1 bln

By Prashant Mehra

MUMBAI (Reuters) - Tata Chemicals Ltd on Thursday agreed to buy U.S. soda-ash producer General Chemical Industrial Products Inc, giving it access to low-cost natural soda ash reserves and a presence in the North American market.

The Indian chemicals maker said it will pay $1.005 billion to private equity firm Harbinger Capital Partners for its largest acquisition to date, The U.S. firm, which earned revenue of $400 million in 2007 has no debt obligations.

"This acquisition gives us ownership of another low-cost soda ash asset. This one is timely, as we picked up a US asset when the rupee is strong," Tata Chemicals Managing Director Homi Khusrokhan told reporters.

Its total soda ash capacity will go up to 5.5 million tonnes a year, from 3 million tonnes now, which analysts said will make it the second largest producer in the world. Brussels-based Solvay (SOLB.BR: Quote, Profile, Research), the biggest, has an 8 million-tonne capacity.

Tata Chemicals earlier acquired U.K's Brunner Mond Group in December 2005 for 8.6 billion rupees ($220 million), giving it soda ash capacities in Europe and Africa.

General Chemical operates a 2.5-million-tonnes a year soda ash capacity in Wyoming, a region that holds the world's largest reserve of raw ore. It holds nearly 100 years worth of extractable deposits in the area, Khusrokhan said.

"It is important to have low-cost advantage.If and when there is downturn in the industry, we will have protection through our cost advantage," he said.

Operating margins for natural soda ash are nearly double that for synthetic soda ash at 30 percent, analysts said.