Kesoram Industries, a part of Kolkata-based BK Birla Group, on Saturday said it has signed a binding term sheet with JK Tyre to sell its entire stake in Cavendish Industries Ltd., a subsidiary tyre-making company, for Rs.2,195 crore.
With Kesoram Industries holding a 99 percent stake in the aforesaid unit, the JK Group will be having substantial management control of the unit in Haridwar in Uttarakhand, with an option to place upto 55 percent stake with its associates or group companies.
The acquisition is proposed to be funded by a combination of debt and internal accruals raised by JK Tyre and other JK Group entities.
The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs.450 crore.
The acquisition will provide JK Tyre with further impetus towards ready expansion in the truck and bus radials segment as well as present an entry option into the two-three wheeler space.
On the other hand, the Rs.2,195 crore will be used by Kesoram Industries to reduce its debt burden.
The transaction -- subject to regulatory approvals -- is likely to be concluded by December this year.
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