India's Escorts hits record high as Japan's Kubota plans to raise stake
BENGALURU (Reuters) -Japan's Kubota Corp will raise its stake in tractor maker Escorts Ltd to as much as 44.8%, the companies said on Thursday, sending shares of the Indian firm to a record high.
Kubota, which currently holds a 9.09% stake in Escorts, will up its stake via subscription to a third-party preferential share allotment, the Japanese tractor and other agriculture machinery maker said.
Escorts approved raising funds of up to 18.73 billion rupees($252.66 million) via issue of 9.4 million shares at 2,000 rupees per share to Kubota, at a 23% premium to Wednesday's closing price.
Shares of Escorts rallied to a record high of 1,824.95 rupees after the announcement.
Osaka-based Kubota expects to raise its stake in Escorts to as much as 53.5% and become a joint promoter.
Escorts said its Chairman and Managing Director Nikhil Nanda could get a potential board seat at Kubota's European business holding firm.
It was also evaluating a potential merger of Kubota's India unit, Escorts' finance arm and its Kubota joint venture with the parent company, Escorts said, adding that it was considering a name change to reflect Kubota in its corporate identity.
India's best known billionaire investor Rakesh Jhunjhunwala also owned 4.85% stake in Escorts, as of Sept. 30.
The Haryana-based agro machinery maker aims to create one of the largest Indo-Japan agriculture collaboration in the farm equipment sector with Kubota, it added in a statement https://archives.nseindia.com/corporate/ESCORTS_18112021120613_OutcomeFinal.pdf.
Escorts added that its current promoter group, the Nanda family, is not selling any shares and will continue to be fully invested in the firm.
($1 = 74.1300 Indian rupees)
(Reporting by Elaine Lies in Tokyo and Shivani Singh in Bengaluru; Editing by Rashmi Aich and Uttaresh.V)
