NEW DELHI: The Competition Commission (CCI) has approved the acquisition of a 10 per cent stake in Escorts Tractors by Japanese tractor manufacturer Kubota corporation.
In March this year, Escorts said that Kubota will buy 10 per cent stake of its stake for Rs Rs 1041 crore.
The CCI said it has approved the proposed combination of the stake sale.
Upon completion of the transaction, Escorts to issue and allot 12,257,688 equity shares through a preferential issue to Kubota at an issue price of Rs 850 per equity share, subject to shareholders’ and necessary regulatory approvals. Kubota’s investment will constitute 9.1 percent of the equity stake on a pre capital reduction or 10 per cent on a post capital reduction basis for a total investment of Rs 1041.9 cr.
The existing 60:40 Joint Venture between Kubota and Escorts, namely Escorts Kubota India Private Limited, will continue to operate.
According to the company, this will be a win-win collaboration and benefit. Escorts from product innovation through indigenization of global R&D, production systems excellence, global supply chain, sales, and distribution and act as a global sourcing hub for Kubota.
The deal will help both Escorts and Kubota to become a leading player in the Indian market and a hub of product development, manufacturing, and sourcing for global markets.