Kubota to invest ₹1,872 cr in Escorts, become joint promoter with Nanda family
Premium- The investment will take place through a preferential allotment, post which Kubota’s stake in the company will increase from 9.09% currently to 14.99%
MUMBAI : Tractor and farm equipment maker Escorts Ltd on Thursday said that Japan’s Kubota will invest ₹1,872.74 crore in the company to increase its stake and will become a joint promoter of the company along with the existing promoters, the Nanda family.
The fresh investment will take place through a preferential allotment, post which Kubota’s stake in the company will increase from 9.09% currently to 14.99%, the company said.
Shares will be allotted to Kubota, subject to shareholder and regulatory approvals, at a price of ₹2,000 apiece. This price is at a premium of 29.5% over the floor price (as per Sebi regulations) of ₹1,544.16 per share, the company said.
In line with Sebi’s takeover regulations, Kubota will also launch an open offer to acquire up to a 26% stake in the company from public shareholders at a similar price of ₹2,000 per share. In case of a complete subscription in the open offer, Kubota will end up with a 44.8% stake in the company (including cancellation of certain shares held by Escorts Benefits and Welfare Trust).
The company said that it will change its name from Escorts Ltd to Escorts Kubota Ltd. JM Financial acted as the financial advisor to Escorts.
Nikhil Nanda shall continue to be the chairman and managing director of the company. The existing promoters are not selling any shares in this transaction. The Nanda family holds an 11.6% stake in the company along with a 25% stake held through Escorts Benefits and Welfare Trust.
The statement added that the change in control of Escorts shall lead to an indirect change in control of Escorts Finance Ltd and thus Kubota will make an open offer to the public shareholders of Escorts Finance to acquire up to 26% of the share capital. The board of Escorts has agreed to evaluate and consider the feasibility of the merger of Escorts Finance with the parent company.
“This will enable both companies to enhance the value they have created by leveraging each other’s strengths – be it in technology, market access, manufacturing processes, or engineering excellence. With this Escorts is positioned to become an institution that will serve Indian and global farmers for decades and centuries. While Escorts is known for its stronger India presence with proven strengths in frugal engineering and manufacturing, Kubota brings world-class processes and global reach and expertise. The transaction will catapult Escorts to a different level of expertise, size, and growth," said Nikhil Nanda, chairman and managing director of Escorts Ltd.
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