Add Anupam Rasayan India Ltd for the Target Rs.10,000 by Emkay Global Financial Services Ltd
Anupam has signed a definitive agreement for acquisition of 100% equity in Jayhawk Fine Chemicals LLC (a US-based specialty chemicals company; “Jayhawk”) for EV of USD134mn at ~9x EV/EBITDA as of CY24 (total purchase consideration of ~USD150mn, including ~USD16mn of cash and cash equivalents and loans payable to the exiting shareholders). The acquisition will be funded via a mix of internal accruals, debt (~USD40mn), and quasi-equity investment of ~USD110mn from a reputed global investment management fund. Jayhawk has logged revenue of ~USD78mn in CY24 (nearly flat over the last 3 calendar years) at EBITDA margin of ~19%. We expect the acquisition to be value-accretive for Anupam and improve its overall presence in the non-agri CDMO space. The transaction is expected to be completed by Q4FY26. We retain ADD on the stock and SoTP-based TP of Rs1,050. We await clarity on the transaction structure and implications on Anupam’s financial statement (Link).
Acquisition to help Anupam charter into the US geography and CDMO space Jayhawk was founded in 1941 with its headquarters in Kansas, USA. It is a part of the CABB group (acquired from Evonik in CY18) and is engaged in the custom manufacture of advanced intermediates, active ingredients, and high-performance materials. Jayhawk has multi-solution sites spread across ~3mn sqmtr with 2 manufacturing units (Unit 1 for performance material and Unit 2 with 4 multi-purpose lines for life/crop-science applications) and a pilot plant for new CDMO projects. Jayhawk can undertake various chemistries like Heterocyclic Synthesis, Azo Chemistry, Suzuki Coupling, Formylation, High Temperature Oxidation, etc, which would supplement Anupam’s existing chemistries. Jayhawk provides Anupam a strategic entry to scale up its US presence and diversify into high-value markets and customers. Anupam’s wholly-owned subsidiary will be acquiring 100% stake of Monitchem Kansas Sarl (incorporated in Luxembourg), which effectively holds 100% stake in Jayhawk. The purchase consideration for the acquisition is ~USD150mn, including ~USD16mn in cash (EV of ~USD134mn at 9x EV/EBITDA).
Strategic synergies from the Jayhawk acquisition Jayhawk caters to demand from end-industries such as aviation, electronics, semiconductors, and agrochemicals. Strategically, this acquisition would a) strengthen Anupam’s positioning in the US market and provide customer access – earlier, exports were predominantly to Japan and Europe, b) tilt the business mix toward performance materials (13% as of FY25 to 35% post-integration), c) add new chemistries to Anupam’s portfolio, d) provide innovation and R&D synergies, and e) complement Jayhawk’s highpurity tech with Anupam’s backward integration capabilities. Anupam will retain Jayhawk’s existing team which is crucial for a CDMO player.
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