Surat’s Ami Organics venture into the Semiconductor Industry

Surat : Manufacturer of advanced pharmaceutical intermediates and specialty chemicals Ami Organics Limited (BSE: 543349, NSE: AMIORG) has announced that its board has approved the acquisition of a 55 percent partnership interest in Baba Fine Chemicals, a fine speciality chemicals company specialising in the synthesis and production of intermediates for pharmaceutical and other industries. The purchase marks AMI Organics’ first steps into the complex and competitive semiconductor market.

The purchase fits in with AMI Organics’ plan to grow its specialty chemicals sector with an emphasis on high-tech, low-volume products in specialised markets where competition is minimal and new entrants face significant obstacles to entry. The commercial orders for AMI Organics’ two electrolyte additives, employed as Solid Electrolyte Interface in Lithium-lon-Batteries, are now in the waiting phase. Through this partnership, AMI will have access to Baba Fine Chemicals’ complementary products, all of which serve the semiconductor sector.

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, Mr. 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.

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