Ami Organics forays into the semiconductor industry

Ami Organics forays into the semiconductor industry

Ami Organics enters semiconductor industry through acquisition of 55% stake in Baba Fine Chemicals

  • By ICN Bureau | April 24, 2023

Ami Organics Limited announced that board has approved acquisition of 55% partnership interest in Baba Fine Chemicals (BFC), a fine specialty chemicals company focused on custom synthesis and manufacturing of intermediates. This acquisition heralds AMI Organics' foray into the high entry barrier semiconductor industry.

The acquisition is in line with AMI Organics' strategy of expanding its specialty chemicals division to focus on niche products manufactured using advanced technology with low competition and high entry barriers.

AMI Organics has already developed two electrolyte additives used as Solid Electrolyte Interface in Lithium-lon-Batteries which are awaiting commercial orders from its customers. This agreement gives AMI access to the complementing products of Baba Fine Chemicals that are also focused on the electronic industry, mainly semiconductors.

Commenting on development, Naresh Patel, Executive Chairman & Managing Director, Ami Organics Limited, said: "We are delighted to partner with Baba Fine Chemicals, a name to reckon with in the highly complex semiconductor industry. This partnership provides us with the impetus to make a mark in the lucrative and high entry barrier semiconductor industry. Our synergies will help scale up BFC's niche product basket given that they are the only manufacturers in the country in their product category. With an exciting R&D pipeline, we are thrilled to work with the BFC team to scale-up their products at a higher volume. The acquisition is in line with our focus of expanding our presence in complex speciality chemicals industry and will complement our product basket of electronic chemicals."

Commenting on development, Rakesh Gupta, Partner, Baba Fine Chemicals, said: "AM/ Organics has a strong track record of developing products using advance technologies in higher volumes which makes them a perfect match for us. I believe our R&D strengths and AMI's operational excellence will help us grow manifold in the coming years."

Transaction details:

- AMI Organics to acquire 55% partnership interest in Baba Fine Chemicals from two partners for the consideration of Rs. 68.2cr subject to adjustments as may be required at closing stage ("Purchase Consideration').

- Third Partner at BFC, Rakesh Gupta will continue to stay on the board and lead the Marketing and Technical Development for BFC.

- The consideration is based on a valuation of 4x adjusted EBITDA for FY23.

- The Purchase Consideration will be discharged through a combination cash consideration and issuance of securities of the Company to the exiting parties on a preferential basis

- The consummation of the transaction is subject to completion of customary conditions precedent including obtaining such approvals as may be required.

- The acquisition of Partnership Interest shall be subject to such regulatory /statutory approvals as may be required under applicable laws including the approval of the shareholders of the Company for issuance of Subscription Shares on a preferential basis.

BFC is engaged in the business of manufacturing specialty chemicals used in semiconductor and electronics industry. BFC Management has a strong track record of handling custom synthesis for commercial production for several complex products as well as scaling up products from R&D stage to commercial scale.  BFC has witnessed average 33% growth in revenue in last 2 years.

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