Swiss engineering firm Ammann Group is picking 70 per cent stake in the consolidated road construction equipment business of Gujarat-based Apollo Group in a deal valuing the business at Rs 400 crore ($73 million).

The foreign partner would invest in the core business of the Apollo Group comprising asphalt plants, pavers, curb pavers, bitumen sprayers, compaction equipment, etc.

Subject to the requisite approval, public listed Gujarat Apollo Industries Ltd and its wholly owned subsidiary, Apollo Earthmovers Limited (AEML), will transfer their entire product portfolio of asphalt plants and the paver business to Apollo Construction Equipment Limited (ACEL) on slump sale basis for an aggregate consideration of approximately Rs 280 crore.

Presently, Gujarat Apollo Industries and AEML hold 40.6 per cent of ACEL. AEML plans to acquire the remaining shares of ACEL from the existing shareholders, which include the directors and promoter controlled entities.

Pursuant to this transaction, ACEL will become a wholly owned subsidiary of AEML. Thereafter, the Ammann group will subscribe to fresh equity shares of ACEL, which will be renamed as Ammann Apollo India Pvt Ltd. The remaining 30 per cent will be held by AEML.

The current management team of the Apollo Group will continue to manage the joint venture and will be complemented by Ammann.

The transfer of business and formation of joint venture has been approved by the board of the respective firms on Wednesday. The joint venture is expected to be formed with all related transactions by mid April 2013.

The board of directors of Gujarat Apollo plans to utilise the sale proceeds in expanding its crushing and screening business and in pursuing diversified business activities.

"This is a highly compelling strategic partnership, bringing together two groups to realise substantial value for all stakeholders and enhance growth prospects" said Anil Patel, the founder and lead promoter of Apollo Group.

"The investment is an important step for the Ammann Group and represents part of a well designed strategy to expand into the Indian market. We intend, with the partnership in the joint venture enterprise, to invest in product developments and innovations for markets both in India and around the world", said Hans-Christian Schneider, deputy CEO and CEO designate of the Ammann Group.

BMR Advisors was the transaction advisor to Ammann group, while Luther LLP and DSK Legal were the legal advisors. Deloitte Touche Tohmatsu and Desai & Diwanji advised the Apollo group.

The Patel family-promoted Apollo Group has been a key player in asphalt mixing plants and asphalt pavers in India employing around 500 employees at three plants in Gujarat. Apollo Group achieved a turnover of more than Rs 300 crore in 2011-12. Around two thirds of this was through the flagship listed firm.

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