Eveready Industries (India) Ltd (EIIL), the B M Khaitan group flagship, is buying out France’s rechargeable battery maker Uniross SA from CG Holding for a total consideration of 10 million euro (Rs 60 crore approx). This is EIIL’s first overseas acquisition in the offshore battery turf.
The Khaitans have entered into a term sheet agreement with Paris-based CG Holding on Thursday to acquire a controlling bloc of some 80% in Uniross SA. As per the agreement, Uniross SA will issue fresh company shares in favour of EIIL and help the latter acquire atleast 80% in Uniross. Post issuance of shares, parent company CG Holdings’ stake in Uniross SA will get diluted to 20% from the existing 65% holding.
Speaking to newsmen from Frankfurt, Eveready Industries India executive vice-chairman & managing director Deepak Khaitan said: "The investment was both by way of equity and debt up to a maximum value of 10 million Euro in an overseas joint venture or a special purpose vehicle, which in turn would acquire a controlling stake of about 80% of the French company."
The deal will, however, be subject to compliance with legal, accounting, commercial, tax and other due diligence of Uniross SA and its subsidiary or group companies, receipt of all necessary regulatory approvals as well as finalisation and execution of the definitive legal and binding agreements, including shareholders agreements, EIIL said in a notice sent across to the stock exchanges on Thursday.
Incidentally, Uniross SA and its subsidiary or group companies have businesses spread over various parts of the world including Europe, South Africa, China, Hong Kong, south east Asia and India. The French firm also has a manufacturing base in China and has on its payroll some 300-odd workers.
"If the transaction gets concluded, EIIL will be able to increase its market share and strengthen its position. If the deal fructifies, we hope to turnaround the company and post a turnover of 40 million euro by June 2009-10," Mr Khaitan added. No merchant banker or valuers were involved in the deal.
Elaborating on the acquisition, Mr Khaitan said, the disinvestment of CG Holdings substantial stake in Uniross is part of the group’s attempt to restructure the rechargeable batteries business which had run into rough weather because of the credit squeeze and the spurt in raw material prices which the company could not pass it on to the consumers.
Of the total deal amount, about 6 million euro will be used to infuse money in the French company. The deal is being funded by a mix of internal accruals and long term debt from lending institutions.
Post acquisition, the Khaitans will continue to sell batteries in the overseas markets under the brand name — Uniross. Closer home, EIIL intends to continue to sell batteries under Uniross umbrella brand and Eveready brand. Since Uniross had picked up 35% in an American company engaged in the manufacture of rechargeable batteries sometime ago, EIIL intends to take a call on the French firms strategic investment in the America.
With this acquisition, EIIL will control about 65% of the total rechargeable organised batteries market. Said Mr Khaitan, "there is scope for expanding the Chinese unit and we may look at it in the near future."
Source: Economic Times