Pitti Engineering Limited (PEL) on March 11 said that it has signed an agreement with Bagadia Chaitra Industries Private Limited (BCIPL) and its shareholders to acquire 100% of the equity share capital of BCIPL at an enterprise valuation of Rs 124.92 crore.
The cost of acquisition would be arrived at by adjusting the said enterprise value for the net debt and working capital changes on the closing date and subject to other adjustments that are mutually agreed between the parties.
In addition, PEL will infuse up to Rs 40 crore as new capital into BCIPL, to repay its existing debt, the company said.
Closing of the proposed acquisition is subject to fulfilment of condition precedents as agreed between the parties and receipt of requisite regulatory, statutory, and other approvals, as may be required.
BCIPL operates out of Tumkur district, Karnataka where it has its manufacturing facilities. BCIPL has an installed capacity of 16,000 tonnes per annum.
This acquisition would help PEL broaden its presence in South India, will add to the overall asset base and production capacity, provide entry into new end use sectors and add new customers.
Overtime, with new customer acquisition and synergies coming in sales and marketing, PEL would be able to sell their existing product portfolio as well to these new customers, thereby enabling greater market penetration. Additionally, the acquisition aligns with PEL’s inorganic growth strategy and will provide enhanced operational strength, the company added in the statement.
“We are very excited to welcome BCIPL’s leadership team, and their employees to the Pitti group. The acquisition of BCIPL is an important step in this direction as it is strategically relevant, provides enhanced operational strength and adds customer base,” said Akshay Pitti, Vice Chairman and Managing Director of Pitti Engineering Limited.
Meanwhile, Singhi Advisors acted as strategic and financial advisor for this transaction.
On Monday, Pitti Engineering's scrip on BSE closed nearly 6% lower at Rs 745.1.
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