Havells to Buy Lloyd Elec­tric’s Con­sumer Biz

The Economic Times - - Money -

te­gic and fi­nan­cial al­ter­na­tives to en­hance share­hold­ers’ value.

“Both sides are en­gaged in ad­vanced ne­go­ti­a­tions and Havells is only keen to buy the branded busi­ness and not the low mar­gin orig­i­nal equip­ment man­u­fac­turer (OEM) piece. The fi­nal ne­go­ti­a­tions are now pre­dom­i­nantly fo­cussed on val­u­a­tions,” said an of fi­cial in­volved di­rectly. “Some of the global play­ers in­clud­ing Elec­trolux as well as home­grown com­peti­tors like Voltas had eval­u­ated the prospect but let go.” The Lloyd pro­mot­ers led by Brij Raj Punj had been seek­ing a sig­nif­i­cant premium for his busi­ness and that has been a deal breaker. Another spoiler has been the stock that has ap­pre­ci­ated 37% in the last 6 months ex­pect­ing a sale. It closed at Rs 324.40/share on Thurs­day.

“It will be an in­ter­est­ing play but I don’t think it will get sold at 4 times sales that was their ini­tial ex­pec­ta­tions,” said a CEO of a com­pet­ing brand. Lloyds also is an OEM of ACs for other brands, be­sides sup­ply­ing air-con­di­tion­ing prod­ucts to In­dian Rail­ways. An­a­lysts say the ra­tio­nale of Havells buy­ing the con­sumer busi­ness to bring long-term scal­a­bil­ity to its con­sumer busi­ness, which ac­count for nearly 21% of its to­tal stand­alone rev­enues. Havells, a home elec­tri­cals com­pany, has been look­ing to ex­pand its ap­pli­ance busi­ness such as wa­ter heater, mixer and fans. The ac­qui­si­tion will give it ac­cess to 10,000-plus dealer net­works across In­dia, 485 au­tho­rised and 31 com­pa­ny­owned ser­vice cen­tres, highly com­ple­men­tary for its con­sumer durable busi­ness.

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