House of Pearl acquires Gurgaon-based Texport Fashions

Apparel company House of Pearl Fashions Limited has acquired textile exports firm Texport Fashions, for just above $1 mn. Texport will exclusively handle orders from departmental store chain JC Penny of the US. House of Pearls is also looking to acquire another facility in Bangladesh.

The new Gurgaon-based facility will also be used by the House of Pearl for servicing its international clients. It has recently received an order of $8-10 mn from JC Penny and the entire production at the newly acquired unit would be used to meet this demand. House of Pearl has concentrated on the woven segment till now but the acquisition of the Gurgaon facility would help it establish a stronghold in the knits segment as well and would also contribute $15 mn to the company.

With regards to the unit at Bangladesh, where House of Pearls already has a presence, the company may run the facility with a joint venture partner with the details to be worked out in a month’s time.

Read The Economic Times article.

The Tata Group restructures shareholding pattern in North Indian Plantation Operations

The shareholding pattern of Amalgamated Plantations Private Limited (APPL), the new company formed by Tata Tea after restructuring its North Indian Plantation Operations (NIPO), is close to finalization. The Tata Group will hold 33-35% in APPL through Tata Investment Corporation (15%) and Tata Tea (18-20%). IL&FS and the World Bank private equity firm IFC will hold 20% stakes each in APPL, while consultancy firm Globally Managed Services will hold 12%. The balance 13-15% will be held by employees and workers of the company.

The company has received SEBI approval for the formation of APPL. Once we get shareholders’ approval, the company will come into existence with effect from April 1, 2007. The transaction process, however, remains to be completed.

Read more in The Economic Times article.
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Tata Tea to divest stake in tea plantations to IFC, IL&FS, workers

US paints company Sherwin-Williams to acquire Nitco Paints

Cleveland-based, US paint major Sherwin-Williams marked its maiden entry into the fast-growing Indian paints market by agreeing to acquire Nitco Paints, an unlisted unit of Nitco Tiles, for an undisclosed amount, assumed to be on the lower side of Rs. 200 crores. Sherwin-Williams has also paid an undisclosed sum towards maintaining ties with flagship company and group concern Nitco Tiles. Nitco Tiles is expected to benefit due to the symbiotic relationship between tiles and paints and a common customer base. The Indian management would be retained for now to enable Sherwin-Williams to have a better understanding of the local market. Later, the company would explore the products and technologies to be introduced in India.

Nitco Paints makes and sells exterior specialty paints in western India through a network of about 3,000 dealers. It posted sales of Rs. 80 crores last year. The acquisition will give the US-based company an established presence in the Indian paint industry, which has historically grown by 1.5 to 2 times of the Indian GDP on a year-to-year basis.

Sherwin-Williams is present in other emerging markets such as China, Uruguay, Brazil and Argentina. The company has a distribution network in 20 other countries through wholly-owned subsidiaries, joint ventures and licenses of technology, trademarks and trade names.

Read The Economic Times and the Business Standard articles.
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Sherwin Williams pursuing business options with Nitco Paints

Hershey forms JV with Godrej Foods; acquires 51% stake in latter

Renowned US-based chocolate maker Hershey has announced a joint venture with Godrej Beverages and Foods Limited, a subsidiary of diversified conglomerate Godrej Industries. The JV, named Godrej Hershey’s Foods and Beverages Limited, would manufacture and distribute confectionery, snacks and beverages across the country.

Under the deal, Hershey will acquire 51% stake in Godrej Beverages and Foods for $60 mn. The parent company Godrej Industries and Hershey will hold 43% in the new venture, and the remaining 6% will be held by JV CEO A Mahendran. Hershey is acquiring 40% from IL&FS which is exiting the venture. Hershey would license to Godrej Foods some of its trademark rights for $2 mn, in addition to royalty payments of less than 5% for domestic sales and 8% for exports. Hershey may also use the facilities of GBFL as a manufacturing base for the company in India. The new entity would get two of Godrej Foods’ existing manufacturing facilities at Mandideep and Chittur.

Read more in The Economic Times article.
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Hershey to buy 51% stake in Godrej Beverages & Foods

SCA and Godrej Consumer Products form JV for hygiene products in India

Swedish consumer and paper goods company SCA and Indian FMCG major Godrej Consumer Products Limited are forming a 50:50 JV, christened as Godrej SCA Hygiene Limited, for the manufacturing and marketing of absorbent hygiene products such as sanitary napkins and baby diapers, in India, Nepal and Bhutan. The joint venture is being set up with an equity capital of Rs. 20 crores through equal investments by both the companies.

For more details, read the press release here.

ADM Capital to invest $107 mn in textile firm S Kumar’s and retail arm Brandhouse

Hong Kong-based private equity firm ADM Capital is investing $107 mn into textiles firm S Kumar’s Nationwide Limited and its retail arm Brandhouse Retail. ADM will invest $82 mn to acquire a 10% stake in S Kumar’s and $25 mn will be invested in Brandhouse Retail for another 10% stake in the company. S Kumar’s will issue convertible warrants to ADM Capital. The deal values the S Kumar’s share at Rs. 82.5, while the Brandhouse Retail share has been valued at Rs. 85. S Kumar’s will utilize $30 mn to repay lenders, while $52 mn will be used to fund capital expenditure plans.

S Kumar’s is a Mumbai-based Rs. 1000-crore textiles and apparel conglomerate. It operates in the worsted, ready-to-wear, consumer textiles, home textiles segments. Brandhouse Retail, which was de-merged from S Kumars, will utilize the entire $25 mn to fuel growth plans. It is also expected to be listed on the exchanges as a separate entity by August. Brandhouse will invest Rs. 400 crores to open 1000 stores across the country over the next three years. It owns and operates S Kumar’s apparel and textile showrooms and manages international brands such as Dunhill, Escada and Stephens Brothers.

Read more in the DNA Money article.
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Dabur to buy 60% stake in Singapore-based FMCG company Unza for Rs. 675 crores

Dabur is about to acquire over 60% stake in Singapore-based consumer goods company Unza Holdings for Rs. 600-675 crores. Dabur is expected to buy out the holdings of private equity funds Actis and Standard Chartered who hold 30% each in the $150 mn-Singapore company. The deal is touted to be one of the largest overseas acquisition deals in the FMCG space, and make it the third-largest FMCG company in India behind HLL and ITC with manufacturing facilities in China, Vietnam, Indonesia and Malaysia.

Unza is a leading personal care manufacturer and marketer in South-east Asia with 48 brands in its portfolio, and is equally owned by the company management and the two private equity funds.

Read more in The Economic Times article.

Ujala maker Jyothy Laboratories plans Rs. 300 crore-IPO

Mumbai-based fast moving consumer goods company Jyothy Laboratories, famous for its Ujala brand of fabric whiteners, is planning to list on the stock exchanges by end of 2007. Jyothy Laboratories will raise Rs. 300 crores in an initial public offering. The company has reportedly appointed Kotak and Enam as advisors to the issue.

Jyothy Labs is a closely held company with about 70% stake being held by founder chairman and managing director M P Ramachandran and his family. The balance 30% is held by private equity firms CLSA and Actis along with a foreign subsidiary of ICICI Bank. The foreign investors are likely to exit the company at the time of the IPO.

Sales of Jyothy Laboratories are pegged at between Rs. 400-500 crores. The company is said to have been valued at around Rs. 1000 crores.

Read more on Moneycontrol.com.

Textile firm RSWM picks up 48.17% in Cheslind Textiles for around Rs. 28 crores

Rajasthan Spinning and Weaving Mills (RSWM), an LNJ Bhilwara Group textile company, has acquired a 48.17% equity stake in Bangalore-based Cheslind Textiles from its promoters for Rs. 27.8 crores. Cheslind is a 100% export-oriented unit manufacturing cotton yarn with a turnover of about Rs. 120 crores. Post-acquisition, RSWM would become one of the top yarn manufacturers in terms of the number of spindles. ICICI Securities was the advisor for this transaction.

RSWM is also making an open offer for acquiring another 20% of Cheslind at a price of Rs. 25 per share, at a 16% premium to Cheslind’s closing market price on the bourses. A successful open offer would take the cumulative acquisition cost for 68.17% equity stake in Cheslind Textiles at Rs. 39.3 crores. The acquisition will be financed through internal accruals.

The acquisition brings in a basket of products including super fine count cotton yarns and would also provide RSWM with an established foothold in the international market. The deal would bring an additional 64,500 spindles under RSWM taking its total spindlage to about 360,000 spindles, pegging it amongst the top yarn manufacturers in the country.

Read the article in The Economic Times.
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Spices company McCormick planning to acquire Indian spice firms Eastern, Lalah’s

US-based McCormick, the world’s largest spice and seasoning company, is scouting for other Indian companies after its failure to buy MTR Foods, later bought by Orkla Foods of Norway. McCormick is looking at some other South-based spice brands such as Eastern and Lalah’s.

The Rs. 170 crore-Eastern is one of the bigger local players in the packaged spices market. Eastern, with a predominant presence in the southern markets, has been interested in a better national spread through the inorganic route. Private equity firm New Vernon is already an investor in the company. It’s learnt that the McCormick team had also visited other players in the packaged spice market such as MDH and Lalah’s.

McCormick’s joint venture company in India, the Kochi-based AVT McCormick, engaged in processing and exports of spices, is reportedly helping the US company with its acquisition plans. McCormick’s Indian JV, which kicked off in 1994, exports Rs. 100 crores worth of value-added spices to developed markets. AVT has over eight decades of experience in agri-business including rubber, tea and a portfolio of spices.

Read The Economic Times article.

ITC Foods to bid for UK’s pickles and spices brands Patak’s

ITC Foods may turn out to put in a formal bid for Britain’s popular pickles and Indian curries brand Patak’s. Heinz, which already has a partnership with Patak’s, is also said to be interested in the company. The valuation of Patak’s has been put around £200 mn, which is considered to be bit pricier for potential partners or buyers. ITC Foods has been approached by Patak’s investment banker NM Rothschild with a proposal.

Read more in The Economic Times article.

Times Group to acquire 667,000 shares in textile firm Sumeet Industries

Bennett, Coleman & Company Limited (BCCL) has entered into an agreement to acquire 667,000 equity shares in Surat-based textile firm Sumeet Industries. Sumeet is a public-listed company engaged in the manufacturing and export of synthetic textile yarn and export of yarn and fabrics. The funds raised may be used to fund the company’s expansion plans that include increasing its polyester spinning capacity from the existing 12,000 tonne per annum to 56,000 tonne per annum. They are also setting up another 10 lines of polyester spinning plant with an annual installed capacity of 44,000 tonnes.

The company is also planning to develop an industrial park for medium & small industries near Kandla port in Kutch. The company owns 55 acres of land in this area and will be adding another 200 acres on which they will set up the infrastructure like roads, water and power supply.

Article in The Economic Times.

Havell’s acquire German lighting firm Sylvania for $300 mn

Havell’s India has acquired Germany’s SLI Sylvania’s lighting business for $300 mn (about Rs. 1350 crores) in an all-cash deal, from a group of private equity firms. This is the biggest overseas takeover by an Indian electrical equipment manufacturer in the lighting business.

The acquisition was made through Havell’s Dutch subsidiary, Havell’s Netherlands BV and would be funded through a mix of debt and internal accruals. The combined revenues are expected to be $1 bn. Deutsche Bank was the advisor to Havell’s on the transaction and Barclays Capital would provide the financing to the deal.

SLI Sylvania operates in key geographies of Europe, Latin America and Africa through 10 manufacturing facilities. The company would get access to all of Sylvania’s markets across the world except Mexico, US, Australia and New Zealand where the business is owned by German lighting firm Osram, one of the largest lamp manufacturers in the world. Sylvania Osram had sold its lighting business to a consortium of three private equity funds comprising Subros, JP Morgan and DDG Capital and Havell’s has acquired the business from this consortium.

Read more on this in Moneycontrol.com.
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Future Capital invests Rs. 20 crores in Biba Apparels

Future Capital, the financial arm of the Future Group, has picked up a minority stake in Mumbai-based Biba Apparels Private Limited for Rs. 20 crores, reportedly in the range of 7-15%. The investment is learnt to be in the form of convertible debentures. Biba Apparels retails ethnic women’s wear at multi-brand outlets like Shoppers’ Stop and Lifestyle and at 42 Biba exclusive outlets in Mumbai, Delhi, Hyderabad and Bangalore. Biba’s projected revenues for the current fiscal are about Rs. 60 crores. It plans to expand in the national capital region (NCR), Chandigarh, Ahmedabad, Surat and Kolkata.

Biba has tied up with the Dubai-based retailer Lulu for its overseas foray. The apparel retailer plans to open 20 Biba outlets in Dubai in the next three months, for which it is in the process of identifying locations and getting its label registered. It is also learnt to be in talks with Reliance Retail for supplying a value apparel brand, priced lower than Biba.

Future Capital manages the private equity fund, Indivision Capital, and real estate funds Kshitij and Horizon. Apart from the investment in Biba Apparels, Future Capital also has some small real estate investments. Indivision had recently invested Rs. 50 crores in health and wellness chain VLCC and earlier picked up a 26% stake in construction firm BE Billimoria.

Read the article in The Economic Times.

Italian coffee company Lavazza buys Barista Coffee Company and Fresh & Honest Café for $125 mn

Lavazza, Italy’s largest coffee company with a turnover of $1.2 bn has acquired coffee chain Barista Coffee Company and coffee vending business Fresh & Honest for an estimated combined valuation of around $125 mn. The two coffee businesses belonged to the Chennai-based Sterling Infotech Group, controlled by NRI takeover tycoon C Sivasankaran. Lazard was the financial advisor to Lavazza on the deal.

C Sivasankaran had bought 65% in Barista from Turner Morrison three years ago, and later purchased the remaining 35% stake from the Tata Group. His Sterling Group was learnt to have paid around Rs. 65 crores for the acquisition of 100% in Barista. Sivasankaran had put the coffee chain on the block in August last year and had appointed Standard Chartered to look for a buyer.

Lavazza earns two-thirds of its annual turnover from packet sales of roast-and-ground coffee powder and the balance from out-of-home cafe and vending business. The company sells packet coffee under the Lavazza brand name through 24,000 outlets in 80 countries. It imports 12% of its total coffee beans from India.

Read the articles in Business Standard and The Economic Times.
Related Link: Lavazza to pump in Rs. 600 crores in Barista

Indian management conducts buyout of Whyte & Mackay’s Indian operations

The Indian management of Scotch giant Whyte & Mackay’s Indian subsidiary Kyndal India has conducted a management buyout of the latter. The MBO was led by the Indian chief Siddharth Banerji. Mr. Banerji was part of the management buyout of Whyte & Mackay in 2001, then backed by current owner of Whyte & Mackay Mr. Vivian Immerman, who later took charge of the Scotch major. Mr. Banerji has acquired Kyndal India giving him control over the regional distribution of global spirits brands like Remy Cointreau and Absolut Vodka amongst others. The details of the transaction have not been disclosed.

Kyndal will not be involved in the domestic operations of Whyte & Mackay. The deal comes in the wake of the Vijay Mallya-led UB Group’s advanced stages of talks to acquire Glasgow-based Whyte & Mackay for about $1 bn. It is learnt that the trading company Kyndal, which is former name of Whyte & Mackay, has a gross turnover of about Rs. 80 crores.

Kyndal would now be positioned as a brand distribution and marketing company focusing on the emerging lifestyle segments of the premium spirits market. Besides Remy and Absolut, Kyndal will also handle the malt spirits portfolio of another Scotch major Morrison Bowmore, which is controlled by Japan’s Suntory. Kyndal is also expected to unveil partnerships with Dutch liqueur company Lucas Bols and a not-yet revealed French entity to bring in premium brandy. The company has bought out the regional brand rights of economy scotch brand Kilt, which is likely to be locally bottled sometime in future.

Read more in The Economic Times article.

Sherwin Williams pursuing business options with Nitco Paints

US-based paints company Sherwin Williams is believed to be in advanced stages of talks with Nitco Paints, an associate company of Mumbai-based Nitco Tiles, for a possible business tie-up. Nitco Tiles is engaged in the building business. Sherwin Williams is pursuing various options like joint venture, buyout and a joint holding company.

Sherwin Williams is the second-largest paint company in the world. Its entry in India is expected to change the dynamics of the colour space in the country, which is currently dominated by biggies like Asian Paints, Berger, Kansai Nerolac, ICI Paints and Shalimar. The paints segment in India is growing at an average 15%.

Read the article in DNA Money.

In a related development, Nitco Tiles Ltd also plans to spend $25-30 mn to acquire stake in a Chinese tile manufacturer within the next two months. Nitco will use the capacity in China to cut costs and to export tiles to other countries directly. The acquisition will be financed out of a proposed Rs. 250 crore-issue of securities to overseas investors or to qualified institutional buyers. The company has already obtained shareholder approval for the issue.

Read more on this in The Economic Times.

Textile firm RSWM planning acquisitions in India, Europe

LNJ Bhilwara group company Rajasthan Spinning and Weaving Mills Limited (RSWM) is planning to make two acquisitions in the next three months: one in India and the other abroad. RSWM is close to acquiring a specialized yarn maker in Europe for €6 mn and a domestic spinning having capacity of 100,000 spindles for Rs. 200 crores. Senior company officials are believed to be in Europe as part of negotiations to seal the European deal.

RSWM is a leading integrated player in the textiles sector. It is also contemplating entering the retail sector and has plans to double yarn capacity to 400,000 spindles. RSWM is also eyeing the high-end denim market in India and overseas for its new product line in denim. The company will invest Rs. 900 crores over the next three years to establish a power plant, enhance yarn capacities, set up a state-of-the-art 27 mn metres per annum denim operations and other initiatives.

The company fabric production is exported to 60 countries, including the Middle East, Europe and the US. It has registered a turnover of Rs. 770 crores in the last fiscal.

Read the article in DNA Money.

Himatsingka Seide completes Bellora acquisition for Rs 116 crores

Bangalore-based silk fabric manufacturer Himatsingka Seide has concluded its 70% stake acquisition in Italian bed linen brand Giuseppe Bellora SpA. The valuation of the acquisition is €20 mn (Rs. 116 crores). The equity value of the transaction is €13 mn (Rs. 75.4 crores) while Bellora has a debt of €7 mn (Rs. 40.6 crores).

Established in 1883, Bellora has presence across leading European department stores along with brand stores. Himatsingka Seide plans to capture the value market taken by the retailers by opening Bellora stores in the US and European markets. Currently Bellora is retailed through 17 owned stores and 350 retail points.

In June 2006, Bellora closed down its own manufacturing facility for restructuring initiative. Henceforth the sourcing for the brand will be undertaken from Himatsingka’s production facility at Hasan, Karnataka, which has a manufacturing capacity of 200 mn metres.

Continuing its acquisition strategy, Himatsingka is in talks with other bed linen brands in the US and UK, which are expected to be completed in a couple of months. During the quarter ended December 2006, Himatsingka Seide registered total income of Rs. 53 crores with a net profit of Rs. 15 crores.

Read the article in Business Standard.
Related Post: Himatsingka to acquire majority stake in Italian textile brand Bellora

Zicom eyes overseas acquisitions, venture capital funding

Zicom Electronic Security Systems Limited, a Rs. 100 crore, Mumbai-headquartered listed electronic security equipment maker, may conclude two overseas acquisitions, one in China and the other in a nearby country, by May-June 2007.

The acquisitions will be in the range of Rs. 30-35 crores each and will be funded through the company’s internal accruals and proceeds of the $11 mn FCCB issue which it had floated in September 2005.

Zicom presently enjoys around an 18% market share in the domestic electronic security equipments segment. Zicom may acquire a 49% stake in a firefighting equipment manufacturing company in a nearby country. The acquired company enjoys an order-book position of Rs. 75 crores and its products will be introduced into the Indian market under the brand name of that company so that the high brand value of Zicom in the Indian electronic security space does not get diluted. In China, Zicom is looking at a JV or a complete buy-out of a firm manufacturing electronic security equipment.

Presently, Zicom sources its components from various players before assembling them into a product. Earlier, this business was mainly restricted to corporates but now it has expanded to cover many other segments as well such as railways, buses, airports and ports which would need highly sophisticated electronic security equipment to meet emerging threats.

The company is also scouting for venture capital funding to fund its retail foray. The company has already opened 11 shops showcasing its products and plans to open 20 more within the next two months.

Read The Economic Times article.

Hershey to buy 51% stake in Godrej Beverages & Foods

Hershey, America’s largest chocolate and confectionery-maker, is acquiring majority stake in the food and beverage business of the Godrej Group. Hershey is acquiring 51% equity stake in Godrej Beverages & Foods for Rs. 238 crores or about $54 mn. Hershey would also license Godrej Beverages & Foods some of its trademark rights for a lump sum payment of about $2 mn in addition to royalty payments of 5% for domestic sales and 8% for exports.

With this investment, financial investor IL&FS will exit from the venture while the holdings of the Godrej Group and that of an individual investor A Mahendran would come down. Post-acquisition, Hershey would hold 51% equity while Godrej Industries would hold 43% stake with the remaining 6% to be held by A Mahendran, a senior executive with the Godrej Group. The deal values the equity stake of Godrej Industries, a listed arm of the Godrej Group, at Rs. 200 crores. The deal values Godrej Beverages & Foods at Rs. 466 crores. Hershey would pick up the majority stake through multiple transactions. This would include acquiring the 40% equity held by IL&FS, acquisition of the convertible preference shares held by IL&FS, Godrej Industries and Mr. Mahendran as also subscription to fresh issue of capital in the company.

Godrej Beverages & Food represents the foods and beverages business of the Mumbai-based Godrej Group. It was formed last year when Godrej Industries transferred its foods division to another group company Godrej Tea. The combined entity was renamed as Godrej Beverages & Food Limited. With a turnover of around Rs. 400 crores, the company is engaged in categories such as tea, edible oils, health drinks including soymilk, tomato puree, fruit drinks and bakery fats.

Read The Economic Times article.

Tata Tea to divest stake in tea plantations to IFC, IL&FS, workers

Tata Tea will divest 80% in its North Indian Plantation Operations (NIPO), and will spin it off to a number of investors and workers. The value of Tata Tea’s 80% stake in NIPO, which consists of 24 estates in West Bengal and Assam, is pegged at Rs. 290 crores, with the entity’s total valuation at Rs. 359 crores. The separation of NIPO will be effective April 1, 2007.

The company will detach itself from plantation management with the divestment. A couple of years ago, Tata Tea handed over the management of its south Indian plantations to its workers. The management of the company will be vested with the workers and Tata Tea will handle the marketing and distribution of NIPO’s produce. World Bank PE arm International Finance Corporation (IFC) and ILFS will each pick up a 20% stake in NIPO. This will be IFC’s first overseas investment in the plantation sector.

Globally Managed Services (GBS), a firm promoted by Mumbai-based Assamese consultant Ranjit Barthakur may pick up 10-15% and the workers of the 24 estates another 15%. The balance will be held by a couple of agri-companies. The agri-companies are being roped in to cash in on Tata Tea’s multi-cropping activities, so that NIPO emerges as an agricultural company with tea as its mainstay.

IFC and ILFS may likely pay nearly Rs. 72 crores each for their acquisition, while GMS will pay Rs. 36-54 crores, depending on the size of its shareholding. The workers will have to shell out Rs. 54 crores; the amount is planned to be raised through loans from the company spread over 5-10 years.

Read more in the Business Standard article.

GE’s India lighting brand CEMA bought by US-based Saratoga Partners

Saratoga Partners, a New York-based buyout investment firm, is buying out GE’s consumer lighting business in India, including the CEMA brand and the manufacturing facility in Gujarat. The financial details of the transaction are not available. Saratoga Lighting Holdings has also entered into an agreement for using the GE brand in the domestic consumer lighting business. CEMA and GE brands together account for over 2% of the domestic consumer lighting market estimated at Rs. 2500 crores.

CEMA Electric Lighting Products India Private Limited, the new legal entity formed during the acquisition, will function as a subsidiary of Saratoga Lighting Holdings. Saratoga Lighting is a portfolio company of Saratoga Partners, a US-based private equity firm that manages a group of investment limited partnerships. It focuses on the global lighting industry and has operations in several countries including USA, China and India.

Read The Economic Times article.

BPL promoters sell 6.3% stake in company in open-market transaction

The promoters of BPL, the Nambiars, have sold a 6.3% stake in the company for about Rs 25-30 crores. The stake was sold in the open market. In June 2006, the Nambiars had significantly raised their stake in BPL through a preferential allotment; they have now sold their stake at more than double the price of the preferential allotment. The allotment was made at a price of Rs 43 per share. The promoters’ stake in BPL has now come down to 65.26% from 72.6% stake as of December 2006.

The preferential allotment made to the Nambiars in June 2006 was in lieu of conversion of a loan advanced by the promoters to comply with the corporate debt restructuring plan. BPL is currently undergoing a debt restructuring programme; BPL has been going through financial pressure including cash flow problems.

For the quarter ending December 31, 2006, BPL had reported net sales of Rs. 24.97 crores on a net loss of Rs. 8.78 crores.

Read The Economic Times article.

Gitanjali Gems acquires second US-based jewellery company Tri-Star Worldwide

Diamond and jewellery manufacturer and retailer Gitanjali Gems has purchased a majority interest in New York-based Tri-Star Worldwide proprietor and marketer of the Canadia branded diamonds and diamond jewellery.

Tri-Star is also a BHP Billiton direct customer and a licensee of CANADMARK. Along with Tri-Star founding partner Beny Sofer & Sons, Gitanjali plans to expand Tri-Star and the Canadia brand. The new partnership will allow Canadia Diamonds to market to leading jewelers of the world, an exclusive network of top US independent jewelers, and to the existing Gitanjali customer base of 1200 independent retail jewelers. Tri-Star Worldwide was founded by Beny Sofer & Sons in 2002. The company started out by selling branded loose diamonds from the recently discovered rich diamond resources in the north-west territories of Canada and was one of the first to offer country of origin certification, along with comprehensive marketing support.

DTC site-holder Gitanjali Gems is based in Mumbai owns the brands Nakshatra, Asmi, Gili, D’Damas, Sangini, Collection G, Gold Expressions and Vivaha Gold. The company is also playing a key role in developing two SEZs, including one across 200 acres in Hyderabad, one of the largest of its kind for jewellery.

Article in The Economic Times.
Related Post: Gitanjali acquires US-based Samuels

Pradip Overseas to form JV with US textile firm; hit capital markets with Rs. 200 crore-issue

Ahmedabad-based Pradip Overseas Limited, a manufacturer of household linens, is forming a JV with a US-based textile company for branding and marketing its home linen in the overseas markets. The size of the JV is around Rs. 200 crores and will be finalized by Pradip next month by signing a Memorandum of Understanding with the US company. The name of the American company has not been disclosed.

Pradip Overseas is also planning a domestic JV with at least two Mumbai-based companies. The companies would look after the branding and marketing activities of Pradip in the domestic market. The domestic JVs will also be worth Rs. 200 crores.

Pradip Overseas is planning to raise funds for its Green Field Textile Park in Ahmedabad in the debt-equity ratio of 60:40. Of the equity, 20% would be raised from the capital markets for which it plans to come out with a public issue of Rs. 200 crores in the next six months. As of December 2006, the turnover of the company was Rs. 280 crores.

Read the Business Standard article.

Peterson Partners invests $3 mn in Coimbatore-based KPR Mills

Peterson Partners, a US-based private equity firm, has made a $3 mn investment in KPR Mills Limited. KPR Mills is a Rs. 450 crore-integrated textile and apparel company and owns spinning, knitting and garment making facilities. It was established in 1975. It has a global presence in the garment exporting industry including cotton yarn, fabric and knitted apparel.

KPR Mills is also the recipient of the largest PE investment in the Indian textile sector. In December 2006, Blue River Capital along with partners Brandot Investments and Argonaut Private Equity had invested Rs. 105 crores in the Coimbatore-based company.

Peterson Partners is based in Salt Lake City in Utah, USA. Peterson specializes in small to mid-sized companies. It was founded in 1995 and has over $300 mn under management through four funds.

Read the press release here.

Norway-based Orkla Foods to buy MTR Foods for $100 mn

As reported earlier, Orkla ASA, the $8.8 bn, Oslo-based diversified conglomerate with interests ranging from branded foods to finance, will buy MTR Foods for $100 mn deal. The deal will see the exit of MTR’s current investors and private equity firms JP Morgan Partners and the Singapore-based Aquarius India Fund. Aquarius had acquired a 20% stake in MTR Foods in 2000, later followed by JP Morgan Partners in 2002, who paid Rs. 20 crores for an additional 28% stake.

JP Morgan headed the company’s nationwide rollout into ready-to-eat foods, ready-to-cook ingredients and branded spices. Four years later, all these products had established brand equity, but the going was getting increasingly difficult due to severe competition.
It has been widely reported that JP Morgan Partners forced the owner’s hand as it was seeking to liquidate what was a small-sized investment for itself. Further, with MTR Foods taking time to achieve profits an IPO exit was not feasible at the current juncture.

Read the article in DNA Money.

The Tata Group may hive off water business

The Tata Group may spin off its bottled water business into a separate company. The group’s bottled water business currently includes a 30% stake in US’ third largest bottled water company Energy Brands, Inc. (Glaceau). The group is also believed to be in talks to acquire Dadi Balsara’s Himalayan water brand. Energy Brands is an associate company of the group. Tata Tea holds a 25% stake in it, while the remaining 5% is held by a subsidiary of Tata Sons, the Tata Group’s holding company. The ideal combination is to develop a complete spread of offerings, from tea and coffee to water, under a single company, to cover the entire spectrum of beverage consumption.

Article in Business Standard.

Anchor Electricals in talks to sell 49% stake to Matsushita Group

Anchor Electricals is in advanced talks with National Matsushita, part of the $69 bn-Matsushita Group of Japan. Anchor is the Indian electrical market leader in switches and accessories. National is the worldwide leader in the development and manufacture of electronic products for consumer, business and industrial needs. Anchor’s senior management is in negotiations with National to divest a 49% stake in Anchor for Rs. 2000 crores.

Matsushita is negotiating for a controlling stake, which the promoters of Anchor, the Shah family, are unwilling to give. The Japanese major is looking at buying a 70% stake in the company, giving them direct access to the Indian electricals market. Anchor enjoys a market share of close to 60% in India. Prior to talks with National Matsushita, Anchor was also speaking to Schneider Electric India and Siemens. However, the talks fell through due to valuation and management control differences.

The Anchor acquisition would give National Matsushita a strong foothold in the overall switches, sockets and miniature circuit breakers (MCB) industry pegged at Rs. 2000 crores. In the Rs. 1000 crore-switches-and-sockets market, Anchor Electricals is the market leader with 30% share followed by MK Electric and Havell’s with 20% share each.

Read The Economic Times article.

Havell’s may buy UK lighting company for Rs. 1000 crores

Electrical and lighting products firm Havell’s India is close to buying a UK-based lighting products company for Rs. 1100 crores. The British company has revenues of more than $400 mn and has manufacturing assets in Latin America. This will be the largest overseas acquisition by an Indian company in the electrical products space. The deal will include the brand and other assets of the UK company; the name of the company has not been disclosed. Havell’s would raise up to Rs. 675 crores through qualified institutional placement. Some of the funds raised would be used, along with debt, to finance the acquisition. This will be Havell’s first overseas acquisition. The acquisition will more than double Havell’s size to a Rs. 3000 crore-company and would give it significant presence outside India.

Read the article in The Economic Times.

Videocon makes revised bid for Daewoo Electronics

The Videocon Industries-led consortium has submitted a revised bid to the creditors of South Korean electronics major Daewoo Electronics for buying their stake in the company. The other strong contender for Daewoo’s assets is South Korean equity fund MBK Partners. Last month, the Videocon-led consortium had lost its preferred bidder status after the creditors of the ailing company rejected its proposal to acquire Daewoo for a lower price following due diligence as the Videocon consortium had asked for a 13% discount on the initial bidding price of $730 mn to acquire a 97.5% stake in the company.

Read the Business Standard article.

UB to look at potential targets to offset probable Whyte & Mackay deal failure

The UB Group has initiated discussions with a clutch of smaller independent Scotch whisky distillers, in case the deal with Whyte & Mackay fails to materialize. Ian Macleod and Macduff International are some of the names that are being mentioned as possible acquisition targets.

UB is working on alternative strategies even as Whyte & Mackay chairman Vivian Imerman is expected to get back on UB’s estimated bid of around £470-480 mn in the next 10 days. Accordingly, UB is looking at buying 2-3 independent distillers with sizable Scotch malt bases valued in the £80-150 mn range. The other potential buyers for Whyte & Mackay are William Grant and Caribbean entity CL Financial who have valued Whyte & Mackay at £300-350 mn.

Read the article in The Economic Times.
Related Post: UB’s bid for Whyte & Mackay hit by price issues

Actis hikes open offer for Phoenix Lamps to Rs. 190

Business Standard reports that PE fund Actis has decided to increase the open offer price for Phoenix Lamps by 25% to Rs. 190 a share, following a directive by the Securities and Exchange Board of India (SEBI). The revised open will open on February 5 and close on February 24.

The mandatory 20% open offer was triggered after Actis bought the entire 37% stake in Phoenix Lamps from its promoters, the Gupta family, last year. The open offer was priced at Rs. 152 a share and was supposed to open on August 31 and close on September 19. Yes Bank was the adviser to Actis for the offer. Actis had agreed to pay Rs. 190 a share to the Guptas, 25% higher than the price of the open offer on account of non-compete fees. However, market regulator SEBI did not agree to this argument. Actis will now make the open offer at Rs. 190 to buy the shares of the remaining shareholders.

Related Post:
SEBI asks Actis to pay Phoenix Lamps’ minority shareholders same price as paid to promoters

Garment manufacturer Mudra Lifestyle to come out with an IPO; price band at Rs. 75 – Rs. 90

Mudra Lifestyle Limited, a fabrics and garments manufacturer has fixed a price band of Rs. 75 – Rs. 90 for its initial public offer (IPO) of 9.58 mn equity shares. The funds raised will be utilized to finance the company’s expansion plans. The IPO opens on Feb. 8 and closes on Feb. 14. The sole book running lead manager for the issue is SBI Capital Markets Limited. The shares are proposed to be listed on BSE and NSE.

The company will be investing over Rs. 177 crores to expand its manufacturing facilities by setting up a new integrated unit having all process of yarn dyeing, weaving and processing at Tarapur and garment manufacturing near Bangalore. Out of the total investments, the company proposes to utilize debt up to Rs. 100 crores. Mudra Lifestyle proposes to raise the balance amount through IPO.

The issue through 100% book-building process constitutes 26.62% of the post issue paid-up capital of the company. It has earlier made a pre-IPO placement of 1.92 mn equity shares to SIDBI Venture Capital Limited and State Bank of India. The net offer to public will constitute 25.29% of the post issue paid-up capital of the company.

For the fiscal year 2005-06, the company’s total income was Rs. 107 crores, while PAT was Rs. 9 crores.

Read the article in The Economic Times.

Himatsingka to acquire majority stake in Italian textile brand Bellora

Bangalore-based textile design and manufacturing firm Himatsingka Seide is acquiring 70% equity stake in Italian textile company Giuseppe Bellora SpA for an undisclosed amount. The transaction is expected to be completed in February 2007. The acquisition is part of Himatsingka’s strategy to acquire high-end distribution networks in the global home textile segment. Established in 1883, Bellora is a pan-European luxury brand in the bed linen segment and has generated revenues of about €29 mn in 2006. Apart from exclusive stores in Italy and other parts of Europe such as Spain, Portugal, Switzerland, Germany and France, the brand has a presence in departmental stores, like Harrods in London, La Rinascente in Milan, and Bonne Marche in Paris, among several others.

Read the article in The Economic Times.

UB’s bid for Whyte & Mackay hit by price issues

United Breweries’ bid for scotch whisky major Whyte & Mackay seems to be running into problems with the British company believed to have raised the price tag to £600 mn. The UB Group and Whyte & Mackay were holding negotiations during the past six months, but the two have failed to reach a conclusion due to differences over the valuations. The UB Group had offered a little over £400 mn; Whyte & Mackay did not agree to this price, which was later upped to around £500 mn.

Whyte & Mackay is the seventh-largest Scotch maker in Scotland with a turnover of $283 mn. It owns major brands like Isle of Jura, Dalmore, Vladivar Vodka and Whyte & Mackay.

Read more in the article in The Economic Times.

Champagne Indage buys South Australia-based wine maker Tandou Wines

Indian wine company Champagne Indage is buying the wine business and winery of Tandou Wines of South Australia for an undisclosed amount. The winery has a capacity of 3 mn cases (27 mn litres) annually. Champagne Indage produces 8 mn litre wines annually. Both the companies have signed an agreement which will be finalized in seven days.

The Australian wine maker will be renamed after the acquisition, likely to be Indage Australia Limited. Champagne Indage plans to diversify into foods and confectionery business and has set up a subsidiary, Seabuckthorn Indage Limited (SIL), to meet this end. Champagne Indage will hold 52.63% equity in this company which currently markets the Leh Berry brand fruit nectar, and has plans to get into jams and fruit juices. The company is also talking to a couple of players for third party manufacturing of its biscuits and jams.

Read the Business Standard and The Times of India articles for more details.

VVF buys out Canada’s Teo Corp

Personal care products and oleo-chemicals maker VVF today announced the acquisition of Canada-based antiperspirant and deodorant maker, Teo Corp. This is the company’s second acquisition in North America after picking up Colgate’s manufacturing facility in Kansas in November Teo Corp had declared bankruptcy in late 2006 and the company will now operate as a wholly owned subsidiary of VVF.

The Colgate plant would be used to produce bar soaps and liquid home and personal care products. Through this acquisition, VVF will now have the capability to produce a range of underarm, deodorant and antiperspirant sticks as well as pain relief sticks. VVF would use the plant to expand its product line offering in North America and to further build its position in the growing private label market for personal care products.

VVF is largely into contract manufacturing for brands like Nivea in addition to having its own soap brands such as Doy, Doycare Aloe Vera, Shiff and Jo. Exports constitute over 50% of the Rs. 675 crores company’s turnover. The company aims to cross the Rs. 1000 crore-mark by 2008. In addition to the yet to be started North America operations, VVF also has operations in Dubai through which it taps the European and African markets.

Read the Business Standard article for more details.

Norwegian company to buy MTR Foods for Rs. 350 crores

Norwegian food company Orkla Foods may turn out to be the acquirer of South-based MTR Foods. The deal size is said to be around Rs. 325-350 crores. Earlier, US spice company McCormick was widely tipped to take over MTR. However, the deal fell through at the last minute due to differences over structuring of the deal, particularly on certain intellectual property issues relating to the brand name.

Orkla is keen on acquiring MTR as it will provide a launch pad for Indian operations. The Norway-based company has presence in bakery, seafood, pizzas, pies, taste enhancers and snacks. In the past, Orkla has grown its international presence through acquisitions in Romania, Sweden, Denmark and Iceland. Orkla Foods is part of Orkla ASA, one of Norway’s largest listed companies with its core businesses being branded consumer foods, specialty materials and financial investments.

MTR’s brand pull is such that several large Indian corporates, including Tata Coffee, ITC, Godrej and several PE funds like Blackstone, Indivision and Actis had shown interest in the company. NM Rothschild was the investment banker for MTR, and had estimated a value of Rs. 300 crores on the company when it called for bids earlier this year. The Maiya family controls 59% stake in the company directly and indirectly, with JP Morgan holding 26% stake. Another fund, Aquarius, holds 14-15%. MTR’s portfolio comprises ready-to-eat, ready-to-cook food ingredients and spices.

Read The Economic Times article for more details.

AV Birla Group to split Madura Garments two-way

Madura Garments, India’s largest branded apparel business, will be split into two separate companies by its owner, the AV Birla Group (AVB). AVB would carve out separate entities for lifestyle and mass brands out of the unlisted company.

The group will unveil MG Lifestyle Brands & Retail Business, a new fashion brands company operating with key brands such as Louis Philippe, Allen Solly and Van Heusen, besides lifestyle retail formats such as Planet Fashion and Trouser Town. SF Jeans, Madura’s denim brand, and the international licensed brand Esprit will also be part of the new entity. MG Popular Brands & Retail Business would operate in the mid-priced-to-mass category with brands like Peter England. Both the new entities will be divisions of AV Birla Nuvo.

Madura Garments is expected to report revenues of round Rs. 600-650 crores in FY 2007, and is currently the leader in the domestic apparel space with annualized growth of 20% in recent years. AVB acquired Madura Garments from UK’s Coats for Rs. 236 crores in 1999. The fashion brands company, which will also include Allen Solly Womenswear and Van Heusen Womenswear, is likely to report a topline of Rs. 450-480 crores, while the standalone Peter England is likely to show up with a Rs. 180 crore-turnover in FY 2007.

Read The Economic Times article.

UB to acquire Whyte & Mackay for £500 mn

The United Breweries Group is close to acquiring Glasgow-based distillers Whyte & Mackay for nearly £500 mn (Rs. 4350 crores) by January-end. This will be the largest outbound acquisition by an Indian company.

United Spirits, a part of the group flagship United Breweries, might be the investment vehicle for the acquisition of Whyte & Mackay.

Citigroup advised Whyte & Mackay, while United Spirits was advised by UBS.

The acquisition follows United Breweries’ attempt to acquire Taittinger, the world’s sixth largest champagne company, for £400 mn.

Read more in the Business Standard article.

Amruth IMFL brands attract attention from Radico Khaitan, Mason & Summers’ Vangal

Radico Khaitan and serial entrepreneur Ramesh Vangal seem interested in buying some liquor assets of the South-based Amruth Group. E&Y has been mandated by the Jagdale family-owned Amruth Distilleries to find suitors for its three IMFL brands and a bottling plant in Kerala which has a valuation of around Rs. 100-150 crores.

Amruth may offload Old Port Rum, Bejois Brandy and Prestige Whisky along with its plant as part of a re-structuring exercise. E&Y has opened talks with several potential buyers in recent weeks. The three brands together sold over a million cases with net revenues of Rs. 68 crores in FY 2006. Old Port Rum is the largest amongst the three brands that sell mainly in the southern markets. Old Port Rum and Bejois Brandy hold respectable share in their respective segments with Kerala being a key market.

Radico Khaitan, the second largest domestic liquor company, has made a slew of mid-sized acquisitions in recent years including the takeover of the IMFL portfolio of Brihans Maharashtra Sugar Syndicate. Ramesh Vangal, who steered Pepsi and Seagram into the country, returned to the liquor space two years back with a start-up entity Mason & Summers. He has been on the prowl for acquisitions to strengthen the operations.

Read the article in The Economic Times.

Textile companies to raise about Rs. 1000 crores through IPO

Booming capital markets are encouraging companies in making the most of the situation. Five leading textile companies are set to raise about Rs. 1000 crores through IPOs in the near future to meet expansion plans, that include opening up retail stores and adding to manufacturing capacities.

The textile firms, which have filed their Draft Red Herring Prospectus (DRHP) with market regulator SEBI, include Oswal Woolen Mills Limited (OWM), House of Pearl Fashions Limited, Yogindera Worsted Limited and Asahi Songwon Colors Limited. The public offers of Pearl Fashions and Yogindera would open on January 16, while Oswal and Asahi have filed their documentation with the market regulator and are in the process of scheduling their IPOs. Total capital expenditure, which these five companies have finalized add up to Rs. 1217 crores, of which the major portion would come from the market.

Oswal Woolen, a flagship company of Nahar Group of Companies, is looking to raise about Rs. 179 crores with a public issue of 8.32 mn equity shares to fund growth plans, which include expanding retail presence through its ‘Monte Carlo’ brand outlets for woolen hosiery and cotton garments. OWM would spend Rs 40 crore on expansion of Monte Carlo brand outlets, taking the number of franchisee-run stores from 21 to 144 by 2009 and company owned stores to six. House of Pearls will tap the market with a total issue of 5.98 mn equity shares, through which it aims to raise up to Rs. 396 crores. It also aims to increase production capacity of the group from 20 mn pieces per annum to 40 mn pieces per annum. The company has earmarked an investment of about Rs. 360 crores for its expansion plans over the next three years, which would see it opening 10 pilot stores for its brand in the country by end of 2007. Asahi Songwon has lined up an expansion plan of Rs. 52 crores, of which it plans to raise Rs. 44 crores through the IPO. It intends to expand manufacturing facilities of CPC Blue Crude from present level of 3600 TPA to 10,800 TPA, set up a plant for manufacturing pigment beta blue and a new captive power plant at Padra, Vadodara. Yarn manufacturer Yogindera Worsted would raise Rs 14.4 crore through its IPO which would comprise an issue of 60 lakh fresh equity shares. The company is planning to utilize the funds to add 3,200 spindles to its current 6,040. The total expansion would need an investment of about Rs. 16 crores. The acrylic and blended company is also planning to diversify into ready to wear garments and would utilize part of the funds to set up a garment manufacturing unit in their Ludhiana facility.

Besides these four, Orient Craft has announced its plans of hitting the capital market soon to raise between Rs. 300-350 crores. In all, the textile public offers are likely to gross in over Rs. 1000 crores from the market.

Read the article in The Economic Times.

Videocon to now bid on a non-exclusive basis for Daewoo Electronics

It looks like that Videocon will not give up on Daewoo Electronics so easily. The Economic Times reports that Videocon Industries has got UBS and Citigroup, its investment bankers, to put forth a completely separate bid for troubled consumer durables maker Daewoo Electronics after recently losing its ‘preferred bidder’ status. The company will now compete on a non-exclusive basis with MBK Partners, a South Korea-based private equity fund which was selected as the secondary bidder for the deal.

The promoters of Videocon, the Dhoots, are visiting Korea early next week to renew discussions with the Korean durable company. Videocon had earlier insisted on a 15% reduction in the original purchase bid of $730 mn. Videocon is now hoping to win the bid on the premise that the second sole bidder is an equity fund without the capabilities and expertise to manage Daewoo’s durable business. However, Videocon may stand to lose the bid in case a new bidder enters the fray, offering a more attractive valuation.

Read more on this in The Economic Times.
Related Posts:
Daewoo creditors call off deal with Videocon
Videocon may agree to a less than 10% cut in bid price for Daewoo Electronics; budges from earlier demand of a 15% cut
Videocon’s Daewoo acquisition in jeopardy

The Pawar family may buy 49% in UB Group winery

Union Agriculture Minister Sharad Pawar’s family could take up to 49% stake in the UB Group’s Four Seasons winery in Baramati, Maharashtra. The Pawar family will also have a strong boardroom presence in the UB Group’s first wine venture in the country. United Spirits, the spirits flagship of UB Group, will directly hold at least 51% stake in Four Seasons. The Pawar family and a few other local stakeholders will own the rest. The Pawar family is expected to keep a significant minority stake in the venture. The seven-member company board, headed by Mr. Vijay Mallya, is likely to have three Pawar family members on it.

The winery will have a five mn-litre capacity (7 mn bottles) and would attract investments of over Rs. 70 crores, when completed. Four Seasons is likely to hit the market with its first premium offering in October this year even though an economy range could be launched earlier.

Read the complete article in The Economic Times.

Italian Annabelle acquires sick Tamil Nadu-based footwear company

Annabelle, an Italian shoemaker, has acquired AS Nissar Ahmed and Co., an Ambur-based sick leather footwear unit, in the leather belt of Tamil Nadu for an estimated €800,000 (Rs 4.6 crores approximately). This is reportedly the first foreign direct investment (FDI) in the formal male footwear segment.

All previous investments have been made in the sports footwear and the foot component sectors. The company will soon commence production to meet its global demands. Annabelle will significantly invest additional capital, besides bringing along technology to make world class footwear. Currently, AS Nissar Ahmed and Co. manufactures around 3000 pairs a day. Annabelle is looking to scale up the production capacity to about 10,000 pairs a day. The Italian shoemaker is sourcing 15,000 pairs of footwear and components, mainly leather shoe uppers and leather unit soles, from India and Bangladesh. Its manufacturing unit in the south of Italy produces close to 15,000 pairs a day.

According to a Council for Leather Exports report, global trade in leather footwear is worth $30 bn, while non-leather footwear is $18 bn. India’s share is a mere 1.4% and 0.15% respectively.

Read The Economic Times article.

Spentex Industries merges with Indo Rama Textiles

Spentex Industries is merging Indo Rama Textiles with itself. The merger ratio has been fixed at 10:9, i.e. for every 10 shares of Indo Rama Textiles the shareholder will get 9 shares of Spentex Industries.

Spentex had acquired 49.03% stake in Indo Rama Textiles in May 2006. Its total equity holding in Indo Rama Textile now stands at 84.02%. Spentex had then acquired an additional 14.99% stake in Indo Rama Textiles through the market and enhanced its stake by 20% acquired through an open offer to the shareholders

Spentex Industries is India’s largest yarn manufacturer and currently has eight manufacturing plants– six in India and two in Uzbekistan.

Read more in the article in The Economic Times.

Daewoo creditors call off deal with Videocon

The creditors of Daewoo Electronics, led by Woori Bank and Korea Asset Management Corp. (Kamco), rejected the Videocon offer to buy Daewoo Electronics. The deal was scrapped mainly due to differences in pricing.

In October 2006, the Videocon-led consortium agreed to buy 97.6% of Daewoo for 700 bn won ($749 mn; €573 mn), but later demanded a 13% cut on the agreed price. Daewoo Electronics, South Korea’s third-largest electronics goods maker by sales has been under a creditor-led debt-rescheduling program since 2000 after collapsing under huge debts, amounting to around $80 bn.

Read The Economic Times and Business Standard articles.

Related Posts:
Videocon’s Daewoo acquisition in jeopardy
Videocon may agree to a less than 10% cut in bid price for Daewoo Electronics; budges from earlier demand of a 15% cut

Videocon may agree to a less than 10% cut in bid price for Daewoo Electronics; budges from earlier demand of a 15% cut

Controversy seems to be seeping into the deal involving the Videocon-Ripplewood combine and Daewoo Electronics. After proving to be the final bidder for Daewoo for $730-750 mn, Videocon had demanded a cut of 15% in the bid price. However, the 40 banks controlling Daewoo Electronics, which has been under a creditor-led debt-restructuring programme since 2000, after its insolvent parent Daewoo Group was put under the workout programme post its collapse under a $80 bn debt, have vetoed the issue.

Videocon is worried about losing out on a global deal, which would bring with it tremendous capabilities in terms of scale and distribution. Also, Daewoo’s creditors are understood to be under pressure from locals for selling the plant to a foreign hand; the Koreans have opposed Videocon’s bid following concerns of technology leaks and opposition over the migration of technology to Korea’s potential rival, India. Accordingly, Videocon has decided to settle for a less than 10% cut in the offer price. Videocon is now willing to settle for the ‘best possible business terms’ for both parties, rather than lose out on the deal. If both parties come to a consensus, the final deal is likely to be signed after another month’s delay. The deal was earlier supposed to be signed sometime in December last year.

Daewoo is estimated to have global sales of about $2.5bn, whereas Videocon Industries’ consumer electronics business is currently generating revenues of about $1.5 bn. The Videocon-led consortium emerged as the preferred bidder to buy a controlling 97.6% stake in Daewoo Electronics.

Read The Economic Times and Business Standard articles – 1 2 3 .