Tata Chemicals to buy British Salt

Indian firm Tata Chemicals' British unit, Brunner Mond, has signed a binding agreement to acquire British Salt Ltd for £93m the Indian company said today.

The acquisition provides an opportunity to secure long term supply of brine for Brunner Mond, the Indian firm said in a statement on Monday.

The acquisition would be financed entirely via debt with no recourse to Tata Chemicals, it said. Tata Chemicals is part of the salt-to-software Tata group, which owns steel giant Corus.

British Salt is a manufacturer of pure dried vacuum salt and has a market share of 50 per cent in UK and owns brine wells in there with residual life of 50 years.

"In terms of valuation, it is attractive," Mehul Desai, analyst with KR Choksey Shares and Securities, said talking about the deal.

"The acquisition also fits in terms of business strategies and we remain positive on this acquisition for Tata Chemicals," Desai added.

Apart from the core business of salt, British Salt is also active in the gas storage business and has a business model, which has a potential to generate additional cash flows for the business, Tata Chemicals said in a statement.

The Mumbai-based firm had signed an agreement in October to 100 per cent equity of South Africa-based bio-fuels firm Grown Energy Pty for $1.1 million (709,400).