Havells to Buy Lloyd Electric’s Consumer Biz
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.