Hinduja Group set to buy Houghton Intl for $1.1 bn

The Hinduja group is close to acquiring US-based chemical company, Houghton International, for around $1.1 billion (Rs 5,912 crore).

The deal was expected to be announced shortly as most of the terms had been agreed upon between the two parties, a top Hinduja official said.

This will be the biggest outbound acquisition by India Inc this year, days after Hyderabad-based Rain Commodities announced the takeover of German speciality firm, Rutgers, for $917 million (Rs 4,900 crore).

Though the Tatas have made a bid to acquire Orient-Express for $1.8 billion (Rs 9,675 crore), in what could be the biggest acquisition by an Indian company this year, the latter's board has called the bid "unsolicited"and has yet to take a call on it.

A top Hinduja official said the company had made the bid and was now waiting for the outcome. "We are awaiting an announcement as some last-minute negotiations are going on," the official said, asking not to be named.

If the Hindujas bag the company, it would be the group's biggest acquisition abroad. A few years ago, the group had bid to take over a private bank, KBL European Private Bankers, but the deal was not cleared by the European banking regulator, citing insufficient data on the funding of the deal.

Houghton serves the metalworking, automotive, and steel industries - and a variety of other markets - with the development, production and management of specialty chemicals, oils and lubricants. The Hindujas have a significant presence in India's oil and lubricants segment with Gulf Oil.

The Hindujas will buy the company from private equity firm AEA Investors, which had acquired Houghton in 2007. The Hinduja group is one of India's biggest industrial houses, with interests ranging from banking and automobiles to chemicals.

Houghton, on the other hand, was founded in 1865 in Valley Forge, Pennsylvania, US. It is privately held and is the world's biggest metal working fluids company on Friday.

The Hinduja brothers, the promoters of the group, are based in London and Mumbai and have vast business interests in India and abroad. In India, the group has three listed entities - Ashok Leyland, IndusInd Bank and Gulf Oil - and also has a significant presence in the BPO sector through Hinduja Global Solutions Ltd.

In the acquisition, the group sees synergy benefits for Gulf Oil, which is in the business of lubricants, explosives, mining contracts, and specialty chemicals. The lubricants division, headquartered in Mumbai, figures among the top-five private sector players in the segment in India.

M&A analysts say many Indian companies are looking for outbound acquisitions as good assets abroad are becoming cheaper due to the economic slowdown in the West.

ANATOMY OF THE DEAL

Acquirer: Hinduja Group Target: Houghton International Deal size: $1.1 billion Main attraction: Hinduja Group firm Gulf Oil's operations have synergy with Houghton's business

Other large deals by India Inc this year: $917 mn Rain Commodities-Rutgers  $635 mn Piramal Healthcare- Decision Resources Note: If Tatas' $1.8-bn bid to acquire Orient-Express materialises, it will be the biggest acquisition this year