Ahmedabad: France’s Saint-Gobain SA, a global leader in glass, building material and construction, will buy the iron pipes business of Ahmedabad-based Electrotherm (India) Ltd for at least Rs 950 crore.
“Electrotherm has today executed binding agreements pursuant to which Saint-Gobain Products Pour La Construction SAS will acquire 100% stake in Electrotherm’s ductile iron pipes business for Rs 950 crore plus the value of working capital at closing,” Electrotherm said in a filing to BSE Ltd on Thursday.
Shares of the company fell nearly 5% to Rs 144.05 apiece on BSE, on a day the Sensex stayed nearly unchanged at 15,836.47 points, down 0.28%.
“This transaction will enable Electrotherm to focus on its core businesses of engineering and steel and also to reduce debt,” said Avinash Bhandari, joint managing director, Electrotherm.
“Our facilities will allow Saint-Gobain to cater to domestic and international markets,” he added.
Saint-Gobain’s pipe business will gain a foothold in India with this acquisition.
With two production sites in Gujarat and Karnataka, sales of Electrotherm’s pipe division were at Rs 549 crore in 2010 with 715 employees, Saint-Gobain said in a statement.
The French company has a presence in 64 countries and employs nearly 190,000 people. The deal is subject to antitrust clearance in India.
KPMG Corporate Finance Llc advised Electrotherm on the deal. A spokesperson of KPMG declined to comment.
Electrotherm, which achieved sales of over Rs 2,300 crore in 2010-11, is India’s largest manufacturer of induction melting furnace and refining equipment.
More than 18 million tonnes of steel is produced on equipment supplied by Electrotherm every year.
The company also has a presence in the electric two-wheelers segment with the brand Yobykes.