Crompton Greaves today said its promoter Avantha Holdings has proposed to sell entire stake in demerged consumer electricals business.
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Crompton Greaves (CG) today said its promoter Avantha Holdings has proposed to sell its entire stake in demerged consumer electricals business to PE firm for an aggregate consideration of Rs 2,000 crore.
"Advent International and Avantha Holdings have signed a share purchase agreement whereby Advent will lead the acquisition of 34.37 percent of CG's consumer products business, Crompton Greaves Consumer Electricals (CGCEL)," said companies.
Singapore-based Temasek will be an independent co-investor alongside Advent in CGCEL.
CGCEL will be demerged from CG into a standalone company and will consequently be listed on the National Stock Exchange of India and Bombay Stock Exchange. Thereafter, global private equity firm Advent and Temasek will make an open offer for additional shares of CGCEL in compliance with takeover regulations.
The transaction values CGCEL at an enterprise value of Rs 6,600 crore (USD 1.07 billion). The transaction is subject to receipt of all statutory and other approvals, including the successful demerger of CGCEL from CG and approval from the Reserve Bank of India and Competition Commission of India.
With six manufacturing facilities, Crompton Greaves Consumer Electricals manufactures and markets a wide spectrum of consumer products, ranging from fans, lamps and luminaires to pumps and household appliances such as water heaters, mixer grinders, toasters, irons and electric lanterns.
"We believe Advent and Temasek are well-positioned to support CGCEL in its next phase of growth," said Gautam Thapar, founder and chairman of the Avantha Group.
The transaction is expected to be completed in the first quarter of 2016.
Earlier on November 24, 2014, the company had intimated that one of the entities of the promoter group of the company (Avantha Holdings) is likely to sell a portion of its shareholding in the company which will house the demerged Consumer business of the company.
Crompton Greaves had filed with the BSE on March 3, 2015, regarding the demerger of CG's consumer business into CGCEL, whereby all of CG's shareholders will receive shares of CGCEL such that the shareholding of CGCEL upon completion of the demerger will mirror the shareholding of CG.
CGCEL has grown at a compound rate of 16 percent per year over the past six years and generated revenue of Rs 2,850 crore for the fiscal year ended March 31, 2014.
Crompton Greave stock price
On April 24, 2015, at 11:34 hrs Crompton Greaves was quoting at Rs 164.35, down Rs 4.15, or 2.46 percent. The 52-week high of the share was Rs 231.00 and the 52-week low was Rs 153.10.
The company's trailing 12-month (TTM) EPS was at Rs 12.34 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 13.32. The latest book value of the company is Rs 53.33 per share. At current value, the price-to-book value of the company is 3.08.
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