Electrical equipment manufacturer Salzer Electronics Ltd is acquiring a majority stake in listed peer Kaycee Industries Ltd.
Coimbatore-headquartered Salzer will initially buy 72.32% stake in Kaycee Industries for Rs 16 crore ($2.28 million) and then make a separate offer to purchase to an additional 26% stake in the company, which is part of CMS Computers Ltd, from the public for around Rs 6 crore.
The total value of the deal will go up to Rs 22 crore ($3.14 million) once both transactions are successfully completed. This will represent an approximate 15.2% premium to Kaycee’s market valuation of Rs 19.09 crore at the end of trading on Friday.
Salzer joint managing director Rajesh Doraiswamy said the acquisition was in line with the company’s strategy of strengthening its product portfolio.
“We expect that this strategic acquisition will enable us to generate long-term value for all our stakeholders.”
Salzer will also tap the acquisition to improve its market penetration, the statement added.
Shares of Kaycee hit their 5% upper circuit on the BSE to close at Rs 3,007.95 apiece. Salzer’s share price closed 15% higher at Rs 135.40 apiece.
The company, which manufactures products such as rotary cam switches, weather tight switches and breaker control switches, was originally bought out by CMS from Bajaj Electricals Limited in 2002.
Salzer, founded in 1985, also produces equipment such rotary cam switches, selector switches and wiring ducts. The company sells its products in domestic and international markets, exporting them to 40 countries.
Mumbai-based global investment banking firm Singhi Advisors acted as the sole advisor to both CMS and Salzer for the deal.