The $3.5-billion R.P. Goenka group, one of the most acquisitive Indian conglomerates of the yesteryears, is scripting a cross-border M&A by mounting a bid for US-based SAE Towers.
KEC International, part of the diversified RPG Group, is bidding to acquire US-based SAE Towers Holdings, which has operations in Brazil and Mexico and is one of the world’s largest producers of steel lattice towers for high-voltage power transmission. KEC is an EPC player in areas like power and telecom infrastructure with operations currently spanning over 20 countries.
Sources say that KEC, which reported revenues of Rs 3,952 crore in FY10, may make a bid in the range of $125-175 million (Rs 583 crore to Rs 817 crore). The deal is is expected to be a bidding scenario, and the clarity is likely to emerge in the next fortnight, added the
source. The bids are expected at a minimum price of $125 million.
"As a matter of policy, we do not comment on speculation," said an RPG group spokesperson when contacted by VCCircle. SAE could not be immediately reached for any comments.
SAE Towers is owned by US-based private equity firm ACON Investments, which has assets under management in excess of $1 billion. SAE was acquired by the PE firm in a spin-out of the electricity tower manufacturing division of ABB, the Switzerland-based power and automation MNC.
SAE has transmission structure manufacturing plants located in Mexico and Brazil. These facilities encompass approximately 475,000 square feet and are capable of producing in excess of 100,000 tons annually.
The shares of KEC were trading at Rs 515.5, up by 1.11%. The company had a market capitalization of Rs 2,651 crore at this price, KEC reported revenues of Rs 3,952 crore in FY10, an increase of over 13% as compared to the previous fiscal's Rs 3,482 crore. It reported a more than 60% growth in net profits with a number of Rs 190 crore in FY10. The firm has operations in markets across Asia and Africa.
KEC recently announced the merger of RPG Cables Ltd with itself, which may result in operational synergies between the two companies. A recent note from credit rating firm ICRA its assigning a short term rating of A1 to the short term debt program of KEC International for an enhanced amount of Rs 250 crore.
RPG, which also has presence in areas like retail entertainment, has been expanding its presence in infrastructure. Calcutta Electric Supply Company (CESC), the flagship of the group, recently completed Rs 300 crore acquisition of Dhariwal Infrastructure, which is developing a 600 mw thermal power plant in Maharashtra.
RPG Group had been part of several high-profile takeovers including CESC, Gramaphone Company of India and Ceat Ltd.