Three European companies in race for Punjab Tractors stake
Three European companies in race for Punjab Tractors stake
New Delhi: Three of the seven bidders for a 43.5% stake in Punjab Tractors Ltd are European companies, in the battle for a slice of India’s fifth largest tractor maker. That’s according to a source involved in the transaction.
The stake held by private equity firm Actis Capital LLP and the promoters of Dabur India Ltd, the Burman family, is worth ₹ 96 crore at the most recent closing price. Punjab Tractors closed 1.7% lower at ₹ 312.7 per share on Monday.
Other bidders may include tractor market leader Mahindra & Mahindra, Tractors and FarmEquipment (Tafe) and International Tractors, as well as truckmaker Ashok Leyland Ltd, the sources said. Currently, the only European tractor makers in India are New Holland Tractors (5.2% market share) and Same Deutz-Fahr (1.4%). Tafe and Same officials declined to comment.
Control of Punjab Tractors will help the successful bidder add nearly 10% to their marketshare in the country’s 350,000- a-year tractor market.
It will also help the company gain or consolidate a presence in the heavier capacity tractor segment, while giving it access to facilities of Punjab Tractors’ units such as Swaraj Engines.
It has a 33.2% stake in the unit and the buyer will effectively hold a 14.4% stake in it.
Punjab Tractors is currently worth ₹ 1,900 crore. The successful bidder will have to make an open offer for 20% of the stake, according to Indian takeover rules.
At its current share price, a 63.5% stake is worth ₹ 1,206 crore if the open offer is fully subscribed.
Analysts expect a successful bid to be at around a 30% premium on the market price, which would increase the value of the 63.5% stake to ₹ 1,568 crore.
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