The promoters of hosiery major Lux group is in the process of merging two group companies with the listed entity Lux Industries Ltd in a non-cash deal at a combined valuation of Rs 861 crore.
“The combined valuation of the two group companies is Rs 861 crore for the merger with the Lux Industries. This is a non-cash transaction. It will help minority shareholders in unlocking value in the long-term. The deal will be ‘EPS accretive’ for the company,” Lux Industries senior VP Udit Todi told PTI.
Todi ruled out consolidation due to any tax or GST related purposes.
The J M Hosiery owns men brand Genx and Ebell Fashions women brand Lyra will get merged with the Lux Industries subject to regulatory approvals.
The Lux Industries board has approved the transaction last week and the promoters will get fresh 48.43 lakh shares of Lux Industries.
The stock price had soared to Rs 1910.90 at BSE on the last trading day of the week against a price of Rs 1779 a share used for valuation purpose for the merger. This results in a notional gain of around Rs 55 crore for the promoters.
The Rs 1779 per share was the average of last two weeks prior to June 26 board meeting that approved the merger as per regulatory norms, Todi said.
The merger will be effective from April 1, 2018.
The shareholding of promoters will rise to 78 per cent post-merger from 73.8 per cent now, but in due course we will dilute our stake to meet the minimum floating norms, Todi said.
The combined group companies topline was Rs 491 crore and profit of Rs 37.5 crore. While, Lux Industries topline was Rs 1142 crore and a profit of Rs 79 crore as on FY18′.
Explaining the merger will be beneficial for the minority shareholders, Todi said equity would be expanded (due issue of fresh 48 lakh shares) by 19 per cent but profit would be up by 47 per cent while EPS by 24 per cent.
The proposed merger will help the presence of the merged entity across various market segments and act as risk mitigation, greater financial strength and flexibility, more focused operational efforts, realizing operational synergies in terms of compliance and governance costs, the company said.
Source: Economic Times