The board of directors of Ami Organics Limited, a manufacturer of advanced pharmaceutical intermediates and speciality chemicals, has approved the acquisition of a 55% partnership interest in Baba Fine Chemicals, a company specialising in the custom synthesis and manufacturing of intermediates. This acquisition marks AMI Organics’ entry into the semiconductor intermediary industry with a high entry barrier.
The company release says that the acquisition is consistent with AMI Organics’ expansion strategy for its speciality chemicals division, which focuses on niche products manufactured with sophisticated technology and low levels of competition and entry barriers. AMI Organics has already developed two electrolyte additives used as Solid Electrolyte Interface in Lithium-lon Batteries and is anticipating commercial orders from its clients. This agreement grants AMI access to the complementary products of Baba Fine Chemicals, a company that is also focused on the electronic industry, particularly semiconductors.
Baba Fine Chemical’s primary activity is chemicals for the semiconductor industry. The company manufactures Electronic Chemicals used as Photo Resists, Anti Reflective Coatings, and Photo Acid Generators. The company offers Silver, Copper, Gold, and Platinum compounds to fabricate semiconductor chips. These inks offer robust performance under extreme conditions and are suitable for manufacturing high-end electronic components. One of the company’s products is used to print circuit boards, making it ideal for creating PCB prototypes for testing and research.
AMI Organics is acquiring the partnership interest in Baba Fine Chemicals from two existing partners for a price of Rs. 68.2 crores, subject to closing adjustments. Rakesh Gupta, the third partner, will continue to direct BFC’s marketing and technical development.
The Purchase Price is predicated on a valuation of four times adjusted EBITDA for FY23. The consideration will be satisfied through cash and the preferential issuance of AMI Organics securities to the existing parties. The consummation of the transaction is subject to customary conditions precedent, including regulatory/statutory approvals and shareholder approval to issue subscription shares on a preferential basis.
The acquisition of a partnership interest in BFC would enable AMI Organics to expand its product line and strengthen its standing in the speciality chemicals industry.
This acquisition illustrates AMI Organics’ dedication to growth and expansion in the speciality chemicals industry and the company’s willingness to invest in strategic partnerships to accomplish its goals. The long-term effects of this acquisition on AMI Organics’ financial performance and market position are unknown.