Vijay Kirloskar is set to unveil a German acquisition for his flagship Kirloskar Electric. Sources said KEC has clinched the bid for Lloyd Dynamowerke & Co (LDW) which manufactures motors, machines and drive systems for Siemens, Alstom, ThyssenKrupp and Gottwald in a deal estimated at around 50 million euro ($70 million).
The acquisition, to be announced later this week, will be effected through a newly-floated subsidiary in Netherlands called Kirsons BV. Sources said a definitive deal to acquire LDW could be signed as early as Thursday. However, the exact deal size could not be ascertained with KEC working on a debt facility with multiple lenders.
Earlier, market speculation also pointed to a possible private equity backing for the takeover, but that looks unlikely at this point.
ET had in its edition dated May 27, 2008 reported about KEC’s bid for LDW. In 2007, LDW had reported revenues of e49 million (roughly $80 million).
The Bremen-based company, which was founded in 1915 and has around 250 employees, may also give KEC access to buoyant verticals like ship building. LDW is currently majority-owned by CMP Capital. Mr Kirloskar could not be contacted immediately.
KEC with plants in Bangalore, Mysore, Tumkur and Hubli has emerged from a rough patch in the 1990s. It manufactures products ranging from A/C motors, generators, DG sets, switchgear equipment, transformers and traction equipment. This acquisition in someways marks the culmination of the Rs 620 crore re-structuring exercise for KEC, aided by sale of real estate, bringing the company back into the profit zone.
In April this year, KEC merged its 76.34%-owned subsidiary, Kaytee Switchgear, with itself. For the first quarter ended June 30, 2008, KEC reported a total income of Rs 196.63 crore with net profit of Rs 5.1 crore while for the 12-month period ended March 31, 2008 it was Rs 733.74 crore with a bottomline of Rs 23.6 crore.
On BSE, the KEC stock in line with many others continued to display bearish tendency closing lower by 0.58% at Rs 120. The scrip, it maybe mentioned, has lost 1.87% over a one-time frame while on a weekly basis it has fallen by 11.08%.
Source: Economic Times