Chennai: France’s Legrand group is to acquire the uninterrupted power systems (UPS) division of India’s Numeric Power Systems Ltd for a total of around Rs 829 crore. The sale will include the electronic equipment manufacturer’s overseas subsidiaries. Numeric Power’s shares rose 20% on the news.
The Chennai-based company informed the stock exchange that the board of directors had approved the sale of the UPS business to Indo Asian Electric Pvt. Ltd, a wholly owned subsidiary of Legrand. The company will sell wholly owned Numeric Lanka Technologies Pvt. Ltd and Numeric Power System Pte Ltd to a Singapore affiliate of Legrand France SA. The sale is subject to regulatory and other approvals.
This deal shows that European interest in Indian firms is strong and that large multinational companies are willing to pay good prices for quality assets that give them a substantial competitive advantage, said C. Venkat Subramanyam, founder and director of Veda Corporate Advisors Pvt. Ltd, an investment bank that structures deals in the venture capital and private equity space.
Legrand will pay Rs 806.44 crore for the units in India and Sri Lanka, and another $4.5 million (around Rs 22 crore today) for the Singapore arm, said Numeric Power managing director R. Chellappan.
Numeric Power chairman R. Veeramani said the company will continue to operate its other businesses in India and abroad, which include foundries and solar solutions.
Yves Martinez, managing director of Legrand India, said, “We intend to accelerate the growth of all brands, by continuing to sustain growth investments—launch of new products, the addition of commercial power and international expansion.”
The Numeric Power board recommended a special dividend payment from the proceeds of the sale of the UPS division.
The deal reaffirms that mid-market entrepreneurs are willing to divest businesses at the right price point, taking a commercial call rather than an emotional one, said Subramanyam. “This deal is differently structured as a business purchase and not as a share purchase, showing that the sale proceeds will go in developing Numeric Power’s other businesses,” he added.
Numeric Power shares rose by their daily limit of 20% to Rs 280.25 on Friday on BSE, while the exchange’s benchmark Sensex fell 0.46% to 17,748.69 points.
The deal will strengthen Legrand’s presence in India through Numeric Power’s sales and service network, Anindya Das, industry manager (energy and power systems practice) at Frost and Sullivan, South Asia, Middle East and North Africa, said in an email. He expects more consolidation in the UPS industry in the next two years.
“This acquisition does not come as a surprise given Legrand’s acquisition of UPS manufacturers in Italy, Turkey and Brazil,” Das said. “This acquisition could mark a change in the dynamics of India’s UPS industry, given the earlier acquisition of Luminous (Power Technologies Ltd) by Schneider Electric in 2011. The deal also provides a fillip to Numeric Power’s aggressive foray into the renewable space.”
leena.s@livemint.com