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ChemChina to acquire 60% in Makhteshim Agan Industries
China National Chemical Corp. (ChemChina) plans to acquire 60% in Israel-based world's
largest generic agrochemicals Makhteshim Agan Industries (MAIN). ChemChina plans to
acquire 53% from open market for US$1.27bn and additional 7% from Koor Industries
(parent company of MAIN) for US $168mn. ChemChina has valued MAIN at US $2.4bn,
which is approximately at 15% premium to the pre-announced closing price, valuation of
27x on P/E, 10.8x EV/EBITDA and 1.4x EV/Sales on FY2012 basis.
Against this, United Phosphorus trades at substantial attractive valuation of 10.9x its FY2012 EPS and 1.2x
FY2012 EV/Sales. We believe UPL should trade at a premium on account of better
profitability compared to global peers and it being a larger player compared to domestic
peers. We have conservatively valued the stock at 13x FY2012E EPS, as against its historic
average of 15x one-year forward earning, which provides adequate margin of safety. We
reiterate our Buy recommendation on the stock with a Target Price of `198.
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