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New Zealand electronics firm Rakon to buy out Bengaluru’s Centum in JV

30 April, 2018

Bengaluru-based Centum Electronics Ltd has agreed to sell its entire 51% stake in a joint venture with Rakon Ltd to the New Zealand electronics maker.

The company will sell the stake in Centum Rakon India Pvt. Ltd for $5.5 million (Rs 36.5 crore), it said in a stock-exchange disclosure. Centum Rakon makes frequency-control products for telecom infrastructure.

After the acquisition, Rakon’s holding in Centum Rakon will go up to 100%.

According to the agreement, Centum Electronics will receive 75% of the deal amount immediately and the remaining 25% over a period of 18 months from the signing date. The deal is likely to be closed by Saturday.

Centum Rakon reported revenue of Rs 74.4 crore for the year through March 2017.

In a February filing, Centum said the business carried on by Centum Rakon was not core to its strategy.

“Telecom markets worldwide are depressed and we do not see any upturn in the immediate future, thereby we may not see any significant improvement in the operations of Centum Rakon,” Centum said in its 2016-17 annual report.

India’s telecom industry has been in turmoil in recent years, especially after billionaire Mukesh Ambani-led Reliance Jio Infocomm Ltd launched its operations in late 2016 and triggered a price war. That eventually resulted in several mobile-phone operators selling out to bigger rivals, merging with competitors or shutting shop.

The telecom infrastructure segment, too, has bore the brunt of this consolidation wave. Last week, Indus Towers Ltd and Bharti Infratel Ltd decided to merge to create the world’s second-largest telecom tower company.

Centum Electronics
Incorporated in 1993, Centum Electronics designs and manufactures electronic products. It serves space, defence and aerospace, industrial, transportation and medical markets.

The company’s consolidated total income stood at Rs 764.5 crore and net profit at Rs 31.27 crore for the year through March 2017.

On the buyout front, Centum acquired a 54.1% stake in French firm Adetel Group AS in July 2016. Adetel’s operations in Europe and Canada give Centum an enhanced footprint outside of India.

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New Zealand electronics firm Rakon to buy out Bengaluru’s Centum in JV

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