-- Gulf Oil to make acquisition from U.S. private equity fund
-- Acquisition will lead to synergy between both companies
-- Acquisition subject to conditions
NEW DELHI--India's Gulf Oil Corp. (506480.BY) on Wednesday said it has agreed to acquire U.S.-based specialty chemicals maker Houghton International Inc. from a private-equity fund for about $1.05 billion.
The purchase -- the largest overseas acquisition by an Indian company so far this year-- will be carried out by a wholly -owned U.K. unit, the Hyderabad-based company said.
The agreement for the transaction with AEA Investors LP was signed Tuesday but the takeover is subject to certain conditions, Gulf Oil said, without elaborating.
It added that Houghton will continue to operate as a separate company after the deal is completed.
"The acquisition fits very well with Gulf's lubricant portfolio," the company said in a statement.
It added that its range of automotive lubricants will complement Houghton's portfolio of industrial chemicals.
The acquisition will allow Gulf Oil, part of the diversified Hinduja Group, to expand its lubricants and chemicals business worldwide.
Indian companies have been increasingly looking overseas for acquisitions because red tape, corruption and land acquisition issues often hurt plans to expand at home.
Founded in 1865, Houghton is a maker of metal working fluids used for metal processing applications including cutting and stamping. The company has 12 manufacturing facilities in 10 countries and reported sales of $858 million for the year ended Sept. 30, and an adjusted EBITDA of $132 million, the Gulf Oil statement said.
The diversified, family-controlled Hinduja Group's businesses range from truck and bus maker Ashok Leyland to IndusInd Bank.
It is controlled by Chairman Srichand Hinduja and his brothers, Prakash P. Hinduja, Gopichand Hinduja and Ashok Hinduja. The Hinduja brothers have a net worth of $8 billion and are India's 9th richest, according to Forbes.
"There will be a lot of synergy. Gulf Oil is into the lubricants business and this acquisition helps it expand," Prakash Hinduja told Dow Jones Newswires on the sidelines of the World Economic Forum.
Mr Hinduja didn't say how Gulf Oil will finance the purchase.
Gulf Oil shares declined as much as 2.3% on the news. They were 1.08% lower at 86.65 rupees ($1.6) in afternoon trading on the Bombay Stock Exchange, underperforming a 0.46% rise in the benchmark index.
Gulf Oil had consolidated revenue of 13.28 billion rupees ($245.4 million) for the year ended March 31.
It said its operations will be able to leverage Houghton's extensive base of industrial customers to offer them a complete end-to-end range of lubricants and in addition there are various synergies that can be achieved in manufacturing strategic sourcing and distribution.
Write to Rakesh Sharma at [email protected]
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