Indian agrochemicals producer UPL Ltd is exploring a bid of more than $4 billion for the agrochemicals business of Platform Specialty Products Corp to expand its global footprint, according to people familiar with the matter.
The bid would challenge a rival offer for the unit by a private equity consortium of Blackstone Group LP and CVC Capital Partners Ltd, the sources said on Monday. A competitive bid would be a boon for Platform Specialty and its biggest shareholder, William Ackman's hedge fund Pershing Square Capital Management LP, which owns 14.5 percent of the company.
Platform Specialty's shares jumped as much as 6.4 percent after publication of the news. The shares were trading up 3.4 percent at $13.41 in New York on Monday in the early afternoon, giving the company a market capitalization of $3.8 billion.
UPL is in talks with buyout firm New Mountain Capital LLC about teaming up on an offer, the sources said. There is no certainty that any bid from UPL will materialize or that it will meet the price expectations of Platform Specialty co-founder and chairman Martin Franklin, a prolific dealmaker who spent $4.9 billion on acquisitions to put together the agrochemicals unit, the sources said.
The sources asked not to be identified because the deliberations are confidential. Platform Specialty, UPL, Blackstone and CVC did not immediately respond to requests for comment, while New Mountain Capital declined to comment.
Franklin launched Platform Specialty in 2013 as a vehicle to buy other companies. Last year, he sold consumer products company Jarden Corp, which he also built through acquisitions over a period of 15 years, to larger U.S. peer Newell Brands Inc for $16 billion.
Platform Specialty operates in two main units, each accounting for half of its sales: performance solutions and agricultural solutions. The performance solutions business makes surface and coating materials used in electronics, automotive production, commercial packaging and printing.
The agricultural solutions business, which is currently up for sale, offers agrochemicals to protect from weeds, insects and diseases. It was built through the $3.5 billion acquisition of Arysta in 2015, the $1 billion takeover of CAS in 2014 and the $370 million purchase of Agriphar, also in 2014.
Activist hedge fund Elliott Management Corp had disclosed a 3.8 percent stake in Platform Specialty as of the end of March.
Based in Mumbai, UPL manufactures and supplies crop protection and specialty chemicals worldwide. It has a market capitalization of 441 billion Indian rupees ($6.85 billion).
(Reporting by Greg Roumeliotis and Lauren Hirsch in New York; Editing by Phil Berlowitz)