JK Tyre to acquire Haridwar tyre unit from Kesoram Industries
12 Sep 2015
JK Tyre & Industries Limited (JK Tyre) and its wholly-owned subsidiary JK Asia Pacific Singapore have signed a binding agreement with Kesoram Industries Ltd (KIL) to acquire Cavendish Industries Ltd (CIL) for Rs2,200 crore.
CIL houses a tyre business undertaking located at Haridwar (Laksar) which manufactures a range of tyres, tubes and flaps.
''The transaction is a reflection of the inherent strength of the company in undertaking acquisitions with turnaround potential and successfully delivering results to all the stakeholders in the business. This was recently evidenced by a similar success story in JK Tyre's acquisition of Tornel, Mexico,'' said JK Tyre Chairman Raghupati Singhania.
Following the acquisition, JK Tyre will hold the largest shareholding block and shall have substantial management control of CIL with an option to place upto 55 per cent with its associates and group companies. The acquisition is subject to conditions.
The acquisition would be funded by combination of debt and internal accruals raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs 450 crore.
The final transaction is expected to consummate over next few months (subject to various approvals) with definitive documentation expected to be executed between the parties in due course of time.
The acquisition will provide JK Tyre with further impetus towards ready expansion in the truck and bus radials segment where it is a market leader as well as entry into the fast growing two-three wheeler tyre market. Accordingly, JK Tyre estimates the transaction to be strategic, revenue accretive and synergistic with its existing tyre business.
Aurum Equity Partners LLP is acting as transaction advisors to JK Group for this deal.
JK Tyre has global presence in 100 countries across six continents with six plants in India and three in Mexico, and has capacity across 9 plants exceeds 20 million tyres per annum.