Escorts slips 8% in two days ahead of closure of open offer by Kubota

Till Friday, March 25, 2022, around 43.62 million equity shares had been tendered in the open offer, against 37.49 million shares proposed by Japan's Kubota Corporation

Shares of Escorts dipped 5.5 per cent to Rs 1,704 on the BSE in Monday's intra-day trade. The stock has fallen 8 per cent in the past two trading days as the open offer made by Japan's Kubota Corporation to acquire additional 28.42 per cent stake in the company ends today. The stock had hit a record high of Rs 1,927 on December 31, 2021.

On November 18, 2021, Escorts' board had announced that Kubota will acquire 37.49 million equity shares or 28.42 per cent of the expanded voting share capital. The open offer price was fixed at Rs 2,000 per share.The open offer for the tendering shares was opened on March 14, 2022 and closes on March 28, 2022.

The offer shares tendered by the public shareholders will be accepted on a proportionate basis, subject to acquisition of a maximum of 37.49 million equity shares. However, there is no assurance that all the equity shares tendered by the public shareholders in the open offer will be accepted. The unaccepted equity shares will be returned to the public shareholders. Around 43.62 million equity shares have been tendered in the open offer till March 25, 2022, according to a disclosure made by Morgan Stanley India in stock exchanges.

Escorts is engaged in manufacturing engines for earthmoving and material handling equipment, agricultural tractors, hydraulic shock absorbers, internal combustion engines, etc. used by railways. Kubota is the Japanese agri-machinery and construction equipment major who owns 9.09 per cent stake in Escorts. Kubota is expected to increase its holding to 53.5 per cent through preferential issue of equity, open offer, and equity reduction.

Meanwhile, Escorts Agri Machinery (EAM) had reported 45.6 per cent year-on-year drop in tractor sales at 6,114 units in February 2022 as against 11,230 tractors sold in February 2021. "The tractor industry wholesales continued to remain subdued in February 2022 due to high base of last year, steep price rise due to commodity price inflation and above normal inventory levels with the channel," Escorts has said in a statement. 

Going forward, the company expects higher rabi sowing this year, good level of water reservoirs, increased Union budget allocations to rural and agri sector and normal monsoon trends to be positive triggers for tractor industry in the coming year.