Pidilite Industries advances 5% on acquisition of Huntsman Group arm

Shares of Pidilite Industries rose 5 per cent to Rs 1,595 on the BSE on Thursday after the company said it has acquired the consumer & bazaar business of Araldite in Indian sub-continent. This is for a cash consideration of approx. Rs 2,100 crore, it said.

“The board of the company approved a definitive agreement with Huntsman Group (USA) for acquiring 100 per cent stake in one of their subsidiaries in India namely, Huntsman Advanced Materials Solutions Private Limited (HAMSPL),” Pidilite Industries said in a press release today.

HAMSPL manufactures and sells adhesives, sealants and other products under well-known brands such as araldite, araldite karpenter and araseal in India. In addition to the Indian sub continent business, the acquisition includes a trademark licence for Middle East, Africa and ASEAN countries.  In the calendar year 2019, business revenue was approximately Rs 400 crore.

ICICI Securities believes that the acquisition is valued at 5x of sales (50 per cent discount to Pidilite’s TTM Mcap/sales). The brokerage said the acquisition would further expand Pidilite’s product portfolio and enhances its geographic presence.

The trading volumes on the counter more-than-doubled with a combined 3.43 million equity shares changing hands on the NSE and BSE. In comparison, the S&P BSE Sensex was down 0.56 per cent at 39,700 points at 01:24 pm.