Tega Industries shares drop 4% on plans to buy Molycop in $1.5 billion deal

Tega Industries fell 4 per cent after the company, along with Apollo funds, entered into a term sheet to acquire Molycop

Shares of Tega Industries fell over 4 per cent on Thursday after the company, in a consortium with funds managed by affiliates of Apollo, entered into a term sheet to acquire Molycop from American Industrial Partners (AIP) at an enterprise value of about $1.5 billion. 

 

The industrial products maker's stock fell as much as 4.05 per cent during the day to ₹1,997.4 per share, the biggest intraday fall since August 6 this year. The stock pared losses to trade 0.15 per cent lower at ₹2,079 apiece, compared to a 0.01 per cent advance in Nifty 50 as of 9:42 AM. 

 

Shares of the company fell for the second straight session and currently trade at 15 times the average 30-day trading volume, according to Bloomberg. The counter has risen 33 per cent this year, compared to a 5.6 per cent advance in the benchmark Nifty 50. Tega Industries has a total market capitalisation of ₹13,846.70 crore.  READ STOCK MARKET LATEST UPDATES LIVE 

Tega Industries, Apollo Funds to buy Molycop 

The Kolkata-based company, in consortium with funds managed by affiliates of Apollo Global Management, will acquire Molycop at an enterprise value of about $1.5 billion, the company said in an exchange filing. The transaction is expected to close by December 31 this year. 

 

The acquisition will establish Tega Industries as one of the world’s leading designers and manufacturers of 'critical-to-operate' consumables for certain production steps in the mining, mineral processing and material handling industries with an innovative and differentiated product portfolio, the company said. 

 

Together, Tega and Molycop reported $1.73 billion (₹15,207 crore) in revenue and ₹217 million (₹1,906 crore) in Ebitda in 2024-25 (FY25). Ebitda stands for earnings before interest, taxes, depreciation, and amortisation. 

 

Once completed, Tega will become the controlling shareholder, with Apollo Funds holding a significant minority equity interest. The consortium will prioritise integration in the first two years and leverage complementary product portfolios to deliver comprehensive mill optimisation solutions. 

 

The combined entity will operate 26 global manufacturing sites, including Molycop’s 13 facilities and three joint ventures. Tega’s strong presence in Europe, West Asia, Africa, and Latin America will be complemented by Molycop’s foothold in the US, Canada, and Australia.

Centrum  Broking on Tega Industries acquisition 

Centrum Broking said that the deal values Molycop at a FY25 enterprise value to Ebitda multiple of 8.6 times. The brokerage noted that Molycop's grinding media business complements Tega's mill liners portfolio and would significantly scale up Tega's presence, with FY25 revenue of ₹16.4 billion for Tega compared to ₹135.2 billion for Molycop. The brokerage retains its positive outlook on the company.

 

The EV/Ebitda multiple assigned to Molycop appears fair and could drive significant value unlocking for Tega through scale and cross-selling opportunities, Centrum said.