India's Gulf Oil to Buy Chemical and Lubricant Company

Second-Biggest Deal by Indian Company


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By Swagato Chakravorty
Thursday, November 8th, 2012

This week, Gulf Oil Corp. (BOM: 506480) announced it will buy out Houghton International Inc. for $1.05 billion in a deal that marks the second-largest acquisition by an Indian company so far in 2012.

Pennsylvania-based Houghton makes chemicals and lubricants used in the machinery and automotive industries. Gulf will be buying Houghton from an American private-equity fund, AEA Investors LP, who had previously bought Houghton in 2007.

Bloomberg’s data indicates that Indian companies have undertaken deals worth $10.2 billion so far this year; Gulf’s deal is superseded by Indian Hotels Co.’s (PINK: IDHUY) $1.86 billion bid for the Bermuda-based Orient-Express Hotels Ltd. (NYSE: OEH).

Houghton had $858 million in sales for the year ended September. Gulf Oil is aiming to expand its lubricant output by some 50,000 metric tons per year, and it may make some additional related acquisitions towards this effort. Through Houghton, it will gain access to chemical factories in 10 countries and customers spread over 75 countries.

As of the end of March, Gulf Oil had 2.2 billion rupees ($40.5 million) of cash and equivalents and 3.5 billion rupees ($64.4 million) in total debt. At close of trading in Mumbai, India on Wednesday, shares fell 1.3 percent to 86.35 rupees, but company shares have risen 54 percent overall in 2012.

Gulf Oil is controlled by the Hinduja Group, a tightly-held conglomerate owned by the Hinduja brothers which gets almost 9 percent of its revenue from Indian operations. The Hinduja Group is also invested in healthcare, media, real estate, finance, and IT businesses.


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