Shares of Lloyd Electric & Engineering tumbled over 15 per cent today after electrical goods company Havells said it will acquire the consumer durables business of the firm for about Rs 1,600 crore.
Leading electrical goods company Havells India is set to acquire the consumer durables business of Lloyd Electrical and Engineering for an enterprise value of ₹1,600 crore.
The acquisition will help Havells India gain an entry in the fast-growing consumer durables segment, especially the air-conditioners, where Lloyd is a leading brand.
The stock, even after a positive opening, failed to hold on to the momentum and plunged 15.15 per cent to Rs 278.15 on the BSE.
On the NSE, shares of the company tanked 15.12 per cent to Rs 278.
”...(Havells’) board has approved the acquisition of Lloyd Consumer Durable Business Division (Lloyd Consumer). The acquisition is proposed to be executed at an enterprise value of Rs 1,600 crore on a debt free, cash free basis subject to closing adjustments,” the company had said in a statement yesterday.
The acquisition, when completed, will mark Havells’ foray into the fast growing consumer durables industry.
The transaction is subject to confirmatory due diligence and is expected to close in the next 8 weeks. The company plans to finance the transaction through a mix of debt and internal accruals, the statement said.
"It will be more challenging for Havells to execute strongly in air conditioner market, compared to existing business,'' say Kotak Securities analysts.
Havells' current business and competitive intensity in consumer durable business and margin dilution will be near-term challenges, according to Morgan Stanley analysts.