Anupam Rasayan Acquires Jayhawk Fine Chemicals: A Major Step Towards Global Specialty Chemical Leadership

Anupam Rasayan Expands Its Global Reach

Anupam Rasayan, a leading specialty chemical company, has signed a definitive agreement to acquire 100% of US-based Jayhawk Fine Chemicals. This move is seen as a significant milestone in the company's journey towards becoming a global specialty chemical leader.

Strategic Rationale and Financial Structure

The transaction is valued at $150 million, comprising an enterprise value of $134 million and $16 million in cash held by Jayhawk. Anupam Rasayan's CEO, Gopal Agrawal, explained that the proposed funding structure involves a $40 million investment from Anupam Rasayan itself, with the remaining $110 million expected to be raised through a quasi-equity structure from a large global financial institution.

This arrangement will grant Anupam Rasayan 100% control and full consolidation of Jayhawk, as the financial partner's investment will not carry voting rights. Key benefits of this deal include:

• Access to niche chemistries like oxidation and Suzuki, which are complementary to Anupam Rasayan's existing expertise
• A significant rebalancing of the company's business mix, with the high-growth performance materials segment constituting approximately 35% of the combined entity's revenue
• Expansion into new markets, including aviation, semiconductors, and electricals

Synergy Strategy and Margin Expansion

Agrawal outlined a multi-pronged synergy strategy to bridge the gap between Jayhawk's lower margins and Anupam Rasayan's higher margins. Key drivers for this include:

• Significant untapped potential at Jayhawk's manufacturing site, with only 15-20% of the land bank currently utilised
• Expansion of Jayhawk's product offering to customers, enabled by the available capacity
• Faster expansion and margin improvement, driven by the acquisition

Future Growth and Outlook

Agrawal expressed confidence in expanding Jayhawk's margins to a level closer to Anupam Rasayan's in the near term. He also pointed out that Jayhawk's key end-markets, such as aviation and semiconductors, are growing at a pace of 20-30% annually. Key takeaways from the acquisition include:

• Anupam Rasayan's commitment to becoming a global specialty chemical leader
• The strategic importance of the acquisition in driving growth and expansion
• The potential for significant margin expansion and revenue growth