New Delhi, Mar 20 : Japanese tractor and machinery manufacturer Kubota Corporation will acquire 10 per cent equity stake, on a post capital reduction basis, in Escorts Ltd ('Escorts'), an engineering conglomerate in India, for 1042 crore in order to integrate and deepen their relationship towards achieving their mutual ambition of global leadership.
Upon completion of this transaction, Escorts and Kubota will partner to become a leading player in the Indian market and a hub of product development, manufacturing and sourcing for global markets. Escorts will issue and allot 12,257,688 equity shares through a preferential issue to Kubota at an issue price of INR 850 per equity share, subject to shareholders’ and necessary regulatory approvals.
Kubota’s investment will constitute 9.1 per cent of the equity stake on a pre capital reduction or 10 per cent on a post capital reduction basis for a total investment of Rs 10,419,034,800. This price represents a premium of approx 48.21 per cent over the last traded price on March 19, 2020. The board of Escorts has given an in-principle approval to consider a reduction of 12,257,688 equity shares of Escorts held by the Escorts Benefit and Welfare Trust, subject to receipt of necessary approvals and upon completion of the preferential allotment to Kubota. This shall ensure that the total equity share capital of Escorts remains unchanged.
Simultaneously with the preferential issue, Escorts will acquire 40 per cent stake in Kubota Agricultural Machinery India Pvt Ltd, the marketing and sales company of Kubota in India. The existing 60:40 joint venture between Kubota and Escorts, namely Escorts Kubota India Private Limited , will continue to operate.(UNI)