JK Tyre drops over 3% on Rs 2,200 crore buyout; Kesoram Industries rallies
Kesoram Industries surged 13.76 per cent to hit its intraday high of Rs 116.20. JK Tyres, on the other hand, fell 5.2 per cent to hit its intraday low of Rs 102.80.
By ET Online |
NEW DELHI: Shares of Kesoram Industries advanced on Monday amid hopes the company would cut its debt considerably after selling its manufacturing facility in Haridwar to JK Tyre & Industries.
The news did not go down well with investors of JK Tyre, as the stock tumbled 3.46 per cent to settle the day at Rs 104.70.
JK Tyre, which is India's third-largest tyre maker, on Saturday said that it has entered into a binding agreement with the BK Birla group flagship to acquire its wholly-owned subsidiary Cavendish Industries, which makes a range of tyres, tubes and flaps, for Rs 2,200 crore.
Kesoram Industries, which rose as much as 14 per cent in trade, erased most of the gains towards the close. The scrip ended 1.37 per cent higher at Rs 103.80.
"Further, the company will hold the largest shareholding block and shall have substantial management control of Cavendish, with an option to place up to 55 per cent with its Associates/Group Companies," JK Tyre said in a filing to the BSE.
The transaction will be financed by a combination of internal accruals and debt raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs 450 crore, JK Tyre said in the filing.
The news did not go down well with investors of JK Tyre, as the stock tumbled 3.46 per cent to settle the day at Rs 104.70.
JK Tyre, which is India's third-largest tyre maker, on Saturday said that it has entered into a binding agreement with the BK Birla group flagship to acquire its wholly-owned subsidiary Cavendish Industries, which makes a range of tyres, tubes and flaps, for Rs 2,200 crore.
Kesoram Industries, which rose as much as 14 per cent in trade, erased most of the gains towards the close. The scrip ended 1.37 per cent higher at Rs 103.80.
"Further, the company will hold the largest shareholding block and shall have substantial management control of Cavendish, with an option to place up to 55 per cent with its Associates/Group Companies," JK Tyre said in a filing to the BSE.
The transaction will be financed by a combination of internal accruals and debt raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs 450 crore, JK Tyre said in the filing.
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