Sudarshan Chemical Industries (506655) M&A announcement summary

Deal rationale and strategic fit

• Acquisition expands the global footprint: descriptions cite 17 manufacturing sites in 11 countries and 33 stock points, as well as operations across 19 sites worldwide.

• Heubach adds pigment technology, IP, customer relationships and strength in coatings and inks; complementary strengths include low-cost Indian manufacturing and plastics.

• Heubach reported 2023 revenue of ~EUR 900 million and has a legacy spanning more than 200 years.

• The acquisition supports global asset expansion and access to major markets, particularly Europe and the Americas.

Financial terms and conditions

• Purchase price is Rs 1,180 Cr / EUR 127.5 million on a debt-free basis; definitive agreements were signed October 11, 2024, using asset purchases for insolvent German entities and share purchases for solvent entities.

• Additional planned cash infusion of Rs 925 Cr / EUR 100 million covers working capital, restructuring, regulatory requirements and integration buffers; funding needs are expected over one year.

• Funding is planned through a mix of debt and equity, with the board to finalize the plan.

• Existing working capital transfers with the acquired operations; management expects no major working-capital infusion.

Synergies and expected cost savings

• Value-capture levers include SG&A, manufacturing and procurement efficiencies, operational restructuring, working-capital and cash management, and recovery of lost volumes.

• SG&A plans include IT, finance, HR and administrative operations, with potential Global Business Services use for non-critical roles; IT integration and procurement optimization are also targeted.

• Some SG&A and manufacturing savings are expected in year one; significant value capture is targeted within a year and full benefits within two years.

• Plans include restructuring underperforming sites and shifting select production.