E-Land Set To Complete Majority Stake Buy Of Mudra Lifestyle

16 August, 2016

The Hong Kong-headquartered fashion apparel arm of South Korean business group E-Land, which received a favourable order last month against a SEBI directive that asked it to pay more per share in the open offer to shareholders of Mudra Lifestyle, is to conclude the share purchase offer by June 29.

The deal has been structured in a way that E-Land will gain majority stake in the public-listed firm through a mix of promoter stake sale, open offer from public and a preferential allotment. This is one of the rare deals where a Korean or an Asian company outside Japan is acquiring majority stake in an Indian public-listed firm.

The market regulator SEBI had earlier asked E-Land to include the non-compete fee of Rs 15 per share that was being paid to the promoters of Mudra Lifestyle, in addition to the open offer price of Rs 60 per share.

Non-compete fees has become a contentious issue as various M&A deals have seen the promoters pocketing a much higher sum, compared to public shareholders, as an additional payment is meant to ensure that they don’t start a competing business soon.

SEBI had said that the non-compete fee of Rs 15 per share, payable to the promoters under the share purchase agreement, should be added to the offer price as after the acquisition, the promoters would continue as co-promoters with the appellant. Thereafter, E-Land had approached Securities Appellate Tribunal (SAT) and SAT ruled in favour of E-Land. The open offer is now under process and will close on June 24, the company has disclosed in a June 23 update to the stock exchanges on the open offer.

Had SEBI’s stand been upheld, the cost of acquisition for E-Land would have been pushed up by another Rs 14.4 crore ($3.2 million).

E-Land had struck a deal to acquire over half of the promoters’ existing stake, besides subscribing to a preferential allotment (for Rs 72 crore) which, combined with the mandatory open offer, will give it at least 51 per cent stake. As per the deal struck with the promoters, the Agarwal family, led by Murarilal Agarwal, will sell a minimum of 10 million shares and may sell up to 12.4 million shares to ensure that the acquirers get majority stake (in case no one tenders shares in the open offer). E-Land already owns 25 per cent in Mudra Lifestyle pursuant to the preferential allotment few months back.

Mudra Lifestyle is into fabrics & garments manufacturing, processing, design development and sampling. It has production capacity of 5.4 million garments per annum, in manufacturing facilities spread across five locations at Bhiwandi, Bangalore, Daman, Tarapur and Navi Mumbai.

E-Land is into fashion apparel, retail and construction businesses. Given its experience in apparel retailing through franchisee route, it may try and take Mudra Lifestyle beyond being a textile company to an apparel retailer. This will be in line with forward integration of several textile and apparel brands who have opened their exclusive retail outlets, mostly through franchisee agreements.

See Our Earlier Report


Leave Your Comment
S Korea's E-Land Arm Buying Majority In Mudra Lifestyle

S Korea’s E-Land Arm Buying Majority In Mudra Lifestyle

Pallavi S 7 years ago
The Hong Kong headquartered fashion apparel arm of South Korean business group E-Land is acquiring a majority stake in mid-sized textile company Mudra Lifestyle Ltd...
International Paper in talks to buy West Coast promoters' stake for $220M

International Paper in talks to buy West Coast promoters’ stake for $220M

Pooja Sarkar 5 years ago
The world’s largest paper company International Paper is in negotiations with SK Bangur group to buy out promoters’ majority stake in West Coast Paper Mills...
Amtek promoters buying majority stake in DSE-listed Adhbhut Infrastructure

Amtek promoters buying majority stake in DSE-listed Adhbhut Infrastructure

Anuradha Verma 4 years ago
The promoters of Amtek Auto Ltd, led by Arvind Dham, have signed a share purchase agreement to acquire 58.5 per cent stake in Delhi Stock...
No Comments

E-Land Set To Complete Majority Stake Buy Of Mudra Lifestyle

Powered by WordPress.com VIP