UPL surges on acquisition

UPL rose 14.30% to Rs 628.95 at 14:29 IST on BSE after the company said it will acquire Arysta LifeScience Inc. for approximately $4.2 billion.

The announcement was made after market hours on Friday, 20 July 2018.

Meanwhile, the S&P BSE Sensex was up 179.61 points, or 0.49% to 36,675.98.

On the BSE, 8.67 lakh shares were traded in the counter so far compared with average daily volumes of 96,140 shares in the past two weeks. The stock had hit a high of Rs 631.80 and a low of Rs 560.25 so far during the day. The stock hit a record high of Rs 902 on 1 August 2017. The stock hit a 52-week low of Rs 537.90 on 19 July 2018.

UPL announced that its wholly-owned subsidiary UPL Corporation ("UPL Corp") has signed a definitive agreement with Platform Specialty Products Corporation to acquire Arysta LifeScience Inc. and its subsidiaries (collectively "Arysta"), a global provider of innovative crop protection solutions, including biosolutions and seed treatment, for approximately $4.2 billion in cash consideration, subject to customary closing conditions and regulatory approvals. A wholly-owned subsidiary of the Abu Dhabi Investment Authority ("ADIA") and TPG have partnered with UPL Corp to support the proposed acquisition. To finance the investment, UPL Corp intends to use a combination of newly issued equity and debt.

This acquisition will create a "New UPL" and fulfills UPL's objective of creating an integrated patent and post-patent agricultural solutions business with a global footprint. "New UPL" will represent a compelling value proposition for growers, distributors, suppliers and innovation partners in a consolidating market.

Following the acquisition, UPL will be one of the world's largest global crop protection companies, with an innovative and differentiated product portfolio. The company will be able to offer a complete basket of solutions for various arable as well as specialty crops comprising of crop protection chemicals, BioSolutions and seeds covering the entire crop value chain from planting to post harvest. The acquisition will give UPL access to a variety of patented products through collaborations and partnerships as well as enhanced in-house R&D capabilities. UPL will have an integrated supply chain with a backward integrated manufacturing base in major markets and deep distribution capabilities across the globe to address needs of growers.

UPL expects annual run-rate synergies of over $200 million, along with significant opportunity to drive revenue growth from the combination from the broader portfolio, geographic presence and shared innovation capabilities. UPL expects the acquisition to be EPS accretive by ~Rs 10 to 12 per share in FY 2020. The acquisition is subject to customary conditions, including the receipt of required regulatory approvals and is expected to be completed in late calender year (CY) 2018 or early CY 2019.

On a consolidated basis, net profit of UPL declined 0.67% to Rs 737 crore on 6.53% rise in net sales to Rs 5691 crore in Q4 March 2018 over Q4 March 2017.

UPL is one of the leading global crop protection products companies headquartered in India. UPL Corp is an operating company that leads the international operations of UPL across the world.

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