JK Tyre Industries limited and JK Asia Pacific Singapore Pte limited, a wholly owned subsidiary of JK Tyre, have signed a binding term sheet with Kesoram Industries limited (KIl) to acquire 100 per cent equity in Cavendish Industries limited (CIl) and the enterprise value is around Rs2,200 crore.
CIl houses a tyre business undertaking located at Haridwar (laksar) which manufactures a range of tyres, tubes and flaps. JK Group has agreed for this acquisition at an enterprise value not exceeding Rs2,200 crore, subject to conditions, wherein JK Tyre will hold the largest shareholding block and shall have substantial management control of CIl with an option to place upto 55 per cent with its associates or group companies. “The transaction is a reflection of the inherent strength of the company in undertaking acquisitions with turnaround potential and successfully delivering results to all the stakeholders in the business,” said JK Tyre Chairman Raghupati Singhania, adding that this was recently evidenced by a similar success story in JK Tyre's acquisition of Tornel, Mexico.
The acquisition will provide JK Tyre with further impetus towards ready expansion in the truck, bus radials segment where it is a market leader as well as entry into the fast growing 2-wheeler and 3-wheeler tyre market. According to JK Tyre estimates, the transaction to be strategic, revenue accretive and synergistic with its existing tyre business.
JK Group is one of the leading conglomerates in India with business interests in automotive tyres, cement, paper, auto-components and other businesses. The flagship company of the JK Group in the tyre business, JK Tyre Industries is amongst the top three automotive tyre manufacturers in India with presence in truck, bus, passenger cars and other vehicles, having nine manufacturing plants all over the world, global dealer and distribution network and strong brands (JK Tyre, Vikrant,Tornel).
JK Tyre is amongst the largest market players in tyre manufacturing in India and parts of Asia. Aurum Equity Partners llP is acting as transaction advisors to JK Group for this deal.