Kubota to speculate Rs 9,400 cr in Escorts to get majority stake

Japanese tractor firm Kubota Corporation has proposed to speculate round Rs 9,400 crore to turn into the bulk stakeholder in India’s fourth-largest tractor maker Escorts Ltd.
After executing the three-tier deal, Kubota Corporation’s stake will enhance to 53.5 per cent from the present holding of round 9 per cent. Kubota stake could be elevated by way of the 2 tranches. In the primary tranche, Escorts will give preferential allotment of 9.36 crore shares to Kubota at Rs 2,000 per share, infusing Rs 1,870 crore. In addition, Kubota will make an open provide at a preferential allotment value of Rs 7,500 crore.
Post the preferential allotment, Kubota’s stake within the firm will turn into 14.99 per cent. Kubota will even make an open provide to the general public shareholders of Escorts to amass as much as 26 per cent of the share capital. The present promoter group — Nanda household — should not promoting any shares of the corporate, Escorts mentioned.Post completion of the open provide and problem changing into efficient, Kubota will turn into a joint promoter of the corporate together with the present promoters.
The holdings of Nanda household, the present promoter, will proceed to stay unchanged after the transaction at 11.6 per cent. The whole is predicted to be accomplished by March 2022. At the tip of the preferential allotment and the merger, the corporate’s board will increase to 16 members and there is not going to be any change within the present administration.
When the transaction is over, Escorts-Kubota will draw a plan for the subsequent six to seven years and this may embody diversifying the product vary. “Nikhil Nanda’s non-employee involvement in the foregoing capacity will not interfere with his commitment and role as the Chairman and MD of the company,” Escorts mentioned. “No compensation, remuneration or any other kind of consideration is proposed to be payable by Kubota Corporation, Japan to Nikhil Nanda for the services proposed to be provided under the aforementioned arrangement,” it mentioned.