Escorts Ltd zooms after Kubota Corporation increases stake in the company

Escorts Ltd zooms after Kubota Corporation increases stake in the company

by 5paisa Research Team Last Updated: Nov 18, 2021, 02:46 PM IST

This is set to become one of the largest Indo-Japan agriculture collaborations, providing Escorts access to the global supply chain and network.

Escorts Ltd, an Indian multinational company that operates in the high-growth sectors of agri machinery, material handling, construction equipment and railway equipment, announced today that it has entered into an agreement with Kubota Corporation, one of the company’s investors, to increase the latter’s stake in the company.

At present, Kubota owns a 9.09% stake in the company, which is set to increase to 14.99%. This will be done by way of preferential allotment, in which, Escorts shall issue 93,63,726 equity shares with a face value of Rs 10 at an issue price of Rs 2,000 aggregating to Rs 1,872.74 crore.

Pursuant to the transaction, Kubota will become a Joint Promoter along with existing promoters of Escorts. Also, in accordance with the SEBI Regulations, it shall make an open offer to the public shareholders of Escorts to acquire up to 26% of the share capital.

While the preferential allotment and open offer are expected to be completed by March 2022, the company’s name has been proposed to be changed to ‘Escorts Kubota Limited’. It shall be the exclusive vehicle for the manufacture and sale of certain products in India and for sourcing from India. The company’s R&D capabilities shall undergo an enhancement that will lead to state-of-the-art product offerings. The collaboration will provide Escorts access to a global supply chain & network.  

Moreover, with an intention of making Escorts the exclusive vehicle of business in India, both the parties are considering a merger of their joint ventures Kubota Agricultural Machinery India Pvt. Ltd (KAI) and Escorts Kubota India Private Limited (EKI).

At 2.39 pm, the share price of Escorts Ltd was trading at Rs 1,815.7, up by 11.38% from the previous day’s closing price of Rs 1630.15 on BSE.

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