Havells to buy Lloyd Consumer for Rs 1,600 crore

Transaction to take about 8 weeks to conclude; will mark former's entry into ACs, washing machines

Havells India Limited, India’s leading electrical appliances and components company, on Sunday announced its board has approved the acquisition of Lloyd Consumer Durable Business Division (Lloyd Consumer). This acquisition, when completed, will mark Havells’ foray into the consumer durable industry. 

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 said in a press statement. The transaction is expected to close in the next eight weeks.

The company has signed an agreement with Lloyd Electrical and Engineering Limited and Fedders Lloyd Corporation Limited for acquiring Lloyd brand and the consumer durable business that is engaged in sourcing, assembling, marketing and distribution of consumer durables including air-conditioners, TVs, washing machines and other household appliances. 

The proforma revenues of consumer durable arm, Lloyd Consumer, for nine months ended December 31, 2016, stood at Rs 1,242 crore and earnings before depreciation, interest, taxes, and amortisation (Ebdita) of Rs 75 crore. Based on its run rate and past performance, full year revenue is estimated at Rs 1,850 crore with proforma Ebdita of Rs 110 crore.

Havells will acquire the consumer business infrastructure, people, distribution network, including and not limited to absolute, exclusive ownership and right to all intellectual property of brand Lloyd, logo, trademark and attendant rights. It plans to finance the transaction through a mix of debt and internal accruals.

Through this acquisition, Havells would mark a foray into the consumer durables industry, which is currently estimated at $15 billion and is growing in double digits with low penetration levels, increasing urbanisation, and an aspirational and expanding middle class. 

According to the statement, Lloyd has, over the last decade, built a brand, distribution and service network to provide a comprehensive experience to its consumers. It is among the top three brands in air-conditioners’ category with a well-entrenched national network in Tier I and II cities. The brand has expanded into TVs and washing machines as well.

Anil Rai Gupta, chairman and managing director, Havells India, said, "The proposed acquisition is in line with Havells objective of 'Deeper into Homes', driving domestic expansion and owning a brand and distribution oriented asset. We would leverage and extend the trust associated with brand Havells to consumers, dealers, vendors of Lloyd and create a similar recognition in consumer durables segment."

Standard Chartered Bank was the financial advisor and AZB & Partners were the legal advisors to the transaction. EY represented sellers as their financial advisor.