JK Tyre & Industries Limited (JK Tyre) and JK Asia Pacific Singapore Pte Limited signed an agreement with Kesoram Industries Limited (KIL) to acquire Cavendish Industries Limited (CIL). CIL has a unit located at Haridwar (Laksar), India which manufactures a range of tyres, tubes and flaps.
JK Group has agreed for this acquisition at an enterprise value not exceeding INR 2200 crores, subject to conditions, wherein JK Tyre will hold the largest shareholding block and shall have substantial management control of CIL with an option to place up to 55% with its Associates/Group Companies.
The acquisition is proposed to be funded, by combination of debt and internal accruals raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of INR 450 crores. The final transaction is expected to be over next few months.
The acquisition will provide JK Tyre with further drive towards ready expansion in the Truck & Bus Radials segment as well as entry into the fast growing 2 / 3 Wheeler tyre market.
Per Dr Raghupati Singhania, Chairman of JK Tyre said “The transaction is a reflection of the inherent strength of the Company in undertaking acquisitions with turnaround potential and successfully delivering results to all the stakeholders in the business. This was recently evidenced by a similar success story in JK Tyre’s acquisition of Tornel, Mexico.”
JK Group, is one of the leading conglomerates in India with business interests in automotive tyres, cement, paper, auto-components and other businesses. The flagship company of the JK Group in the Tyres’ Business, JK Tyre & Industries Aurum Equity Partners LLP is acting as transaction advisors to JK Group for this deal.