Australian construction major Leighton's Indian subsidiary bought Welspun's stake, for $99 million (around Rs 613 crore). The joint venture will now be renamed Leighton India.
Welspun group exited the joint venture at a possible marginal gain of Rs 28 crore. The steel-to-textiles group bought 35% stake in the company for Rs 470 crore in 2011.
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Earlier this year, it increased its stake in the joint venture by transferring 72% of its engineering, procurement and construction (EPC) orderbook of around Rs 550 crore, which is valued at Rs 115 crore. Welspun had then said that it was more attuned to the role of an infrastructure developer, and hence is exiting from its construction business orders.
“Welspun Corp decided to exit the venture, to enable Welspun to redirect its efforts and reposition itself in the infrastructure space which has synergies with its other businesses. To streamline the structure, Welspun Infratech has also entered into an agreement with Welspun Infra Developers to acquire its 40% stake in WIPPL,” Welspun said, in a statement to the stock exchanges.
The proceeds of the the transaction will be used by the group to repay its debt and de-leverage its balance sheet. “Welspun Group intends to concentrate on businesses which have potential to give it scale consistent with its quest for being in leadership position,” Welspun said. The transaction is expected to be completed in the first quarter of 2014, after meeting procedural conditions.
The stock of Welspun Corp shot up by almost ten% in today's trade after the announcement of the sale was made. The stock closed at Rs 64.4, as per data available on the Bombay Stock Exchange.