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Is Kubota going to be the largest shareholder of Escorts?

Is Kubota going to be the largest shareholder of Escorts?


Kubota Corp- A Japanese Agricultural Machinery Company will invest as much as 9,375 crores (about $1.26 billion at current exchange rates) to increase its stake in India’s fourth-largest tractor manufacturer, Escorts Ltd to become its co-promoter.

Mumbai-listed Escorts said, “It will issue 9.36 million new shares worth Rs. 1,872 crore through a preferential route to one of the leading Japanese Agricultural Machinery manufacture, Kubota. It will increase Kubota’s stake to 14.99% from 9.09% at the end of the month, September 2021.

Kubota will pay Rs. 2,000 per share for each share of Escorts at a premium of 22.7% from Wednesday’s closing price. Escorts’ shares surged 10.6% on the BSE on Thursday to close at Rs 1,802.90 per share. The stock jumped over 60% from touching its year low in May this year.                   

Additionally, Kubota will also release a mandatory open offer for public shareholders to buy shares from them. At Rs 2,000 per share, Kubota is going to shell out Rs 7,498 crore to increase its stake in Escorts adhering to the regulatory guidelines. Consequently, Kubota’s stake will increase to 44.8% after adding fresh shares to their portfolio. Post deal, the company’s name may be changed to Escorts Kubota Ltd. 

According to Escorts’ official, “Its founding Nanda Family isn’t selling any stake and therefore Nikhil Nanda will continue to serve as the chairman and managing director of the company. Along with that, the new entity under Kubota will retain key managerial people.

The Nanda family owns an 11.6% stake in Escorts. While, some employee trusts have a 25% stake. But Nanda family will hold 11.8% and the trust will own 16.3% after the preferential share issue. Public Shareholders’ stake will go down to 27.1% from 54.3% after the deal.

When it comes to Escorts’ public shareholders, Rakesh Jhunjhunwala owns 4.75% shares. Some other public shareholders include life insurance firms, domestic asset managers, T. Rowe Price and Schroders, etc.

 

Kubota will also merge its couple of joint ventures with Escorts for promoting manufacturing and marketing of Agricultural Machinery.

A change in control of Escorts will result in an indirect change in control of Escorts Finance Ltd which is a non-banking financial company.

Kubota Corp- A Japanese Agricultural Machinery Company will invest as much as 9,375 crores (about $1.26 billion at current exchange rates) to increase its stake in India’s fourth-largest tractor manufacturer, Escorts Ltd to become its co-promoter.

Mumbai-listed Escorts said, “It will issue 9.36 million new shares worth Rs. 1,872 crore through a preferential route to one of the leading Japanese Agricultural Machinery manufacture, Kubota. It will increase Kubota’s stake to 14.99% from 9.09% at the end of the month, September 2021.

Kubota will pay Rs. 2,000 per share for each share of Escorts at a premium of 22.7% from Wednesday’s closing price. Escorts’ shares surged 10.6% on the BSE on Thursday to close at Rs 1,802.90 per share. The stock jumped over 60% from touching its year low in May this year.                   

Additionally, Kubota will also release a mandatory open offer for public shareholders to buy shares from them. At Rs 2,000 per share, Kubota is going to shell out Rs 7,498 crore to increase its stake in Escorts adhering to the regulatory guidelines. Consequently, Kubota’s stake will increase to 44.8% after adding fresh shares to their portfolio. Post deal, the company’s name may be changed to Escorts Kubota Ltd. 

According to Escorts’ official, “Its founding Nanda Family isn’t selling any stake and therefore Nikhil Nanda will continue to serve as the chairman and managing director of the company. Along with that, the new entity under Kubota will retain key managerial people.

The Nanda family owns an 11.6% stake in Escorts. While, some employee trusts have a 25% stake. But Nanda family will hold 11.8% and the trust will own 16.3% after the preferential share issue. Public Shareholders’ stake will go down to 27.1% from 54.3% after the deal.

When it comes to Escorts’ public shareholders, Rakesh Jhunjhunwala owns 4.75% shares. Some other public shareholders include life insurance firms, domestic asset managers, T. Rowe Price and Schroders, etc.

 

Kubota will also merge its couple of joint ventures with Escorts for promoting manufacturing and marketing of Agricultural Machinery.

A change in control of Escorts will result in an indirect change in control of Escorts Finance Ltd which is a non-banking financial company.