Ami Organics Ltd, a leading manufacturer of advanced pharmaceutical intermediates and specialty chemicals, gained as much as 4 percent in intraday trade on Monday after it announced a foray into the semiconductor industry through the acquisition of a 55 percent stake in Baba Fine Chemicals (BFC).

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BFC is engaged in the business of manufacturing specialty chemicals used in the semiconductor and electronics industry.

Ami Organics said that the transaction gives it entry into the “complex” and “high entry barrier” semiconductor industry with a strong brand such as BFC.

Ami Organics will acquire the stake in BFC from two partners for Rs 68.2 crore, subject to adjustments as may be required at the closing stage. The deal is expected to be completed in six months.

The purchase consideration will be discharged through a combination of cash consideration and issuance of securities of the company to the existing parties on a preferential basis.

Commenting on development, Ami Organics’ executive chairman and managing director Naresh Patel said, “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.”

Meanwhile, BFC partner Rakesh Gupta said, “Ami Organics has a strong track record of developing products using advanced technologies in higher volumes which makes them a perfect match for us. I believe our R&D strengths and Ami’s operational excellence will help us grow manifold in the coming years.”

Notably, BFC has reported revenue of around Rs 47 crore in financial year 2023, Rs 36.6 crore in financial year 2022 and Rs 26.4 crore in financial year 2021.

Ami Organics said that the acquisition of BFC is EPS (earnings per share) accretive for the company. This means that it increases the acquiring company’s earnings per share.

Shares of Ami Organics are trading off the day's high, up 0.6 percent at Rs 1,063.