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Automotive Product Finder Magazine | Tractor major Kubota Corp to buy 10 per cent stake in Escorts Ltd
Tractor major Kubota Corp to buy 10 per cent stake in Escorts Ltd
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Kubota Corporation, a leading global tractor and machinery manufacturer from Japan, will acquire 10 per cent equity stake, on a post capital reduction basis, in Escorts Ltd., a leading engineering conglomerate in India, in order to integrate and deepen their relationship towards achieving their mutual ambition of global leadership.
Upon completion of this transaction, Escorts and Kubota will partner to become a leading player in the Indian market and a hub of product development, manufacturing and sourcing for global markets.
In this transaction, Escorts will issue and allot 12,257,688 equity shares through a preferential issue to Kubota at an issue price of Rs 850 per equity share, subject to shareholders’ and necessary regulatory approvals. Kubota’s investment will constitute 9.1 per cent of the equity stake on a pre capital reduction or 10 per cent on a post capital reduction basis for a total investment of Rs 10,419,034,800. This price represents a premium of approx. 48.21 per cent over the last traded price on March 19, 2020.
The Board of Directors of Escorts, has given an in principle approval to consider a reduction of 12,257,688 equity shares of Escorts held by the Escorts Benefit and Welfare Trust, subject to receipt of necessary approvals and upon completion of the preferential allotment to Kubota. This shall ensure that the total equity share capital of Escorts remains unchanged.
Simultaneously with the Preferential Issue, Escorts will acquire 40 per cent stake in Kubota Agricultural Machinery India Pvt. Ltd, the marketing and sales company of Kubota in India. The existing 60:40 JV between Kubota and Escorts, namely Escorts Kubota India Private Limited, will continue to operate.
Nikhil Nanda, Chairman and Managing Director, Escorts Ltd., said, “At Escorts, we believe in strategic global partnership with an objective to address global farm mechanization needs. We are pleased to partner with Kubota to offer farmers with innovative solutions and thereby maximize productivity for profitable growth in domestic and export geographies. This collaboration aims at leveraging R&D strengths of Kubota to offer cutting-edge products for domestic and export markets, serving customers in new markets and new product lines. With our manufacturing expertise and strong domestic distribution combined with collaboration with Kubota, we aim to reach our objective of becoming the market leader in farm mechanization, and address the food security challenge.”
Yuichi Kitao, President and Representative Director, Kubota, Japan, said, “We are excited to make strategic investment in Escorts. It is a validation of our mutual commitment to offer best in class technology products for global markets and thereby enhance customer experience. Escorts has a strong technology legacy and diversified portfolio in agriculture equipment solutions market and Kubota has proven global technology capabilities. Through this collaboration, we believe that we will cater to India and other growing economies which require high-end technology and new age tractors to address growing demands of highly mechanized farming. Kubota and Escorts, together, with their leadership in respective geographies will consolidate strengths and technology innovation excellence to emerge as a global leader.”
Escorts Acquires 40 % Stake
Kubota Acquires 10 Per Cent Stake In Escorts
Japan's Tractor Major Kubota
Preferential Allotment To Kubota
Escorts And Kubota
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