Havell’s promoters to dilute stake to part-fund SLI buy
Havell’s India is infusing about $65 million (Rs 275 crore) in the company through an equity issue to part-fund the acquisition of SLI Sylvania.
By Vivek Sinha, TNN |
NEW DELHI: Havell’s India is infusing about $65 million (Rs 275 crore) in the company through an equity issue to part-fund the acquisition of SLI Sylvania. Last month, the electrical products manufacturer had announced the acquisition of the Frankfurt-based lighting company in a $300-million all-cash deal.
As per the financing structure, about $40 million is budgeted for pension liabilities of the target company, the remaining $260 million to be paid upfront is being funded through debt. Of the total debt being raised, about $160 million would be raised by SLI Sylvania, while Havell’s would service the remaining debt component of $100 million. Havell’s plans to part-finance this debt through an equity infusion.
Havell’s India joint managing director Anil Gupta told ET, “We have a window of 18 months to refinance a part of the debt. There are various options under consideration including a qualified institutional placement (QIP) and private equity. We are yet to take a final call on the timing of the placement.”
At the current share price of Havell’s, a Rs 275-crore equity placement would translate into an equity dilution of about 10%. However, if the share price moves upwards, then the dilution would be in the 5-10% bracket.
The financial transaction for the acquisition including the share transfer is likely to close in the next two weeks. While Havell’s consolidated financials for FY08 would include the figures of SLI Sylvania, there are no immediate plans to merge it with the parent company.
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The management is currently looking at operation integration issues. Havell’s is in the process of devising a strategy to introduce its non-lighting products through Sylvania’s brand portfolio in markets such as Latin America and certain countries in Europe.Following the launch of Sylvania in the domestic market, Havell’s plans to have a multi-branding strategy for lighting products. Havell’s currently sells lighting products under its own brand name.
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