Japan’s Kubota to pick up to 53% stake in Escorts

Japanese agriculture and heavy equipment firm Kubota Corp will increase its stake in India’s to 53 percent to take control of the company as part of the Osaka-based conglomerate's strategy to double down on the growth potential of the tractor market in India.

Kubota will buy shares at Rs 2000 a piece via fresh issuances and through open offer to retail shareholders, Escorts said in an exchange notification. Escorts will issue 93,63,726 equity shares of face value of Rs 10 each at a price of Rs 2,000 per equity share to Kubota on preferential basis.

The partnership with Kubota will enable Escorts to have access to global best practices and state of the art research and development facilities which will complement Escort’s proven strength in engineering and execution in India and across the world, both the companies said in a statement.

ET first reported about the potential transaction on Sept 22.

“Kubota has decided to increase its shareholding in Escorts based on expectations for the basic tractor market to expand in emerging countries including India. In addition, the management has also considered such investment as the best way for Kubota to utilize combined resources in an effective manner and further strengthen the partnership between the two companies," Japan's agricultural machinery company said in a statement.

Escorts will issue 9363726 shares to Kubota through a preferential issue at Rs 2000 per share to raise 1872.74 cr, while it will make an open offer to acquire 26 percent stake.

JM Financial was the financial advisor, while Transaction Square acted as transaction advisor and DMD Advocates acted as Legal advisors to Escorts in the deal.

Shares in Escorts were trading up 7.7 percent post announcement.