Ashok Leyland, M&M lead Punjab Tractors bid race; TAFE, Tatas back out, Tata Group buys plant in South Africa

Ashok Leyland Limited and Mahindra & Mahindra Limited appear to be the frontrunners in the race to acquire a stake of around 43% in Punjab Tractors Limited. The 43% stake has been put on the block by owners, Delhi-based private equity fund Actis and the Burman family, promoter of Dabur. According to unconfirmed reports, Ashok Leyland has placed a higher bid in the range of Rs. 320-380 per share. The Ashok Leyland bid demands some guarantees from the management. Details of M&M’s bid were not known.

If it does eventually manage to acquire the share, Ashok Leyland will have to make a mandatory open offer of another 20% of Punjab Tractors and would eventually become a majority shareholder of the company. An announcement on the stake sale is expected shortly. However, it is still not clear whether Leyland has also managed to acquire the 14% stake Punjab Tractors holds in group company Swaraj Mazda Limited and the 33% stake in Swaraj Engines Limited through the bidding process.

Punjab Tractors has strong brand equity in the tractor market, especially in the northern part of India and the winning bidder could enter the fast-growing tractor segment through this acquisition.

In a related development, of the four front-runners, the Tata Group, uncomfortable with the valuation of the deal, has backed out of the bidding process, while Tractor and Farm Equipment (TAFE) is also believed to have pulled out of the race. The final bids have seen the list of bidders for Punjab Tractors coming down significantly. That list includes Sonalika (International Tractors), Escorts, Italian tractor company Same Duetz-Fahr and a private equity consortium that was backing Punjab Tractors’ former boss Yash Mahajan.

Meanwhile, the Tata Group has acquired a car making plant in Pretoria in South Africa for an undisclosed amount, which will be used as a base for Tata Motors exports to Europe, besides catering to the South African market.

Read the articles in DNA Money and Business Standard.
Related Post: Actis and the Burmans seek re-bids for Punjab Tractors

Actis and the Burmans seek re-bids for Punjab Tractors

Private equity fund Actis and the Burman family, the promoters of Dabur, who together hold a controlling 43.5% in Punjab Tractors (PTL), have rejected offers for the acquisition of their stake from seven interested parties. These companies include Mahindra & Mahindra, Ashok Leyland and Sonalika Tractors and have now been asked to make binding bids by next Monday.

The re-bid was reportedly prompted due to the non-binding nature of the offers. Also, the bids were much lower than the company’s share price, which has shot up around 30% in the month after the bids were invited.

Actis holds 29.5% and the Burmans hold 14% in the Rs. 958-crore tractor company, while the rest is held by financial institutions, the public and banks. Punjab Tractors is India’s fourth-largest tractor making company, with an 8% market share.

Read Business Standard article.
Related Posts:
M&M, TAFE eye Actis’ 29% in Punjab Tractors
M&M, Escorts vie for stake in Punjab Tractors; Actis, Burmans to sell out
Ashok Leyland bids for Punjab Tractors

Ashok Leyland bids for Punjab Tractors

Truck and bus manufacturing company Ashok Leyland has put in a bid for Punjab Tractors Limited (PTL). With the acquisition of PTL, Ashok Leyland intends to gain access in the tractor business. Ashok Leyland’s tractor foray is part of its bigger strategy of becoming an integrated automotive player.

The company has already been cranking up its component business and has set up a separate auto components division. It is also setting up a new gear manufacturing facility for its component business with special focus on third-party jobs.

Read The Economic Times article.

Setco acquires Haldex manufacturing facility in the US for around $5 mn

Clutch manufacturer Setco Automotive has acquired the US manufacturing facility of Haldex Brake Products Corporation for $4.9 mn (around Rs. 22-23 crores). The company has a presence in 14 countries and intends to set up operations in 30 countries in three years. Last year, around the same time, Setco had acquired the Lipe Clutch division of the Dana Corporation for Rs. 16 crores. The acquisition would be funded, 13 crores in part by internal accruals, and Rs. 9 crores by way of debt, provided by the New York branch of Bank of Baroda.

Setco has acquired the company through its overseas subsidiary Setco Automotive NA in the UK.

The company, formerly known as Gujarat Setco Clutch, has posted a net profit of Rs. 5 crores on a total income of Rs. 67 crores last year. Harish Sheth, currently the MD of the company, and his family are the promoters of the company and hold 65% stake. New Vernon Private Equity holds 14% and the rest is widely held by the public. Setco has been a supplier of clutches to all major Indian truck companies including Tata Motors, Eicher and Ashok Leyland.

Read the articles from Business Standard and The Economic Times.