New Delhi, November 18

Leading agricultural machinists Escorts Ltd and Kubota Corporation on Thursday announced a deal under which the Japanese partner will acquire an additional 5.9% stake in the Indian company for Rs 1,872.74 crore, paving the way for the latter to become a majority shareholder for whom he could invest around Rs 10,000 crore.

Transaction dynamics

• As part of a multi-structured agreement, Kubota will increase its stake in Escorts to 14.99% after a preferential issue of 93.64 lakh shares.
• Kubota, which currently owns 9.09% of Escorts’ capital, will then make an open offer to public shareholders to acquire up to 26% of the capital.

As part of a multi-structured agreement, Kubota will increase its stake in Escorts to 14.99% after a preferential issue of 93.64 lakh shares at an issue price of Rs 2,000 per share, for a total of 1,872 , Rs 74 crores. He will become co-promoter in Escorts.

Kubota, which currently owns 9.09% of the capital of Escorts, will then make an open offer to public shareholders to acquire up to 26% of the share capital in accordance with SEBI regulations at the same price as the preferential issue, said Escorts. in a press release. .

In the event that the open offer is fully subscribed, Kubota’s investment for this purpose could exceed Rs 8,250 crore and its stake in Escorts would increase to 44.80% after the first capital reduction.

As part of the agreement, there will be a selective reduction in the company’s share capital through the cancellation and extinction of all residual shares currently held by the Escorts Benefit and Welfare Trust, a promotion entity, without payment of any consideration to said trust, the company declared in a regulatory record.

Kubota Corporation will become a co-promoter with the Nanda family, the existing promoter of Escorts, which currently owns 11.6% of the capital but does not sell any of its shares under the deal.

Together with the Nanda family, the Escorts Benefit and Welfare Trust – the current promoters of Escorts currently hold a 36.59% stake in the company. Escorts stated that its board of directors also approved the change of the company name from “Escorts Ltd” to “Escorts Kubota Ltd”. – PTI