Shardul Amarchand Mangaldas advised Capstone Polyweave Private Limited (Capstone) on Strategic Partnership with Intertape Polymer Group Inc. (IPG).
IPG will be partnering with the current shareholders of Capstone, who are also the shareholders and operators of Airtrax Polymers Private Limited (Airtrax). The principal purpose of the partnership will be to provide IPG with a globally-competitive supply of certain woven products.
For the transaction, IPG will form a Joint Venture with Capstone, a newly incorporated entity into which the existing woven products business of Airtrax will be demerged. Airtrax manufactures and sells woven products primarily to the domestic market in India that are used in various applications, including in the building and construction industry.
The Mergers & Acquisitions team of Shardul Amarchand Mangladas advised Airtrax, Capstone, Mr. Anil Jain and Mr. Raj Jain (promoters of these two companies) in this multi-stage transaction. The team was involved in drafting and negotiating all transaction documents and providing general corporate advisory on the deal. The Team was led by Ms. Akila Agrawal, Partner; and included Mr. Sourav Kanti De Biswas, Partner; Ms. Megha Bhargava, Principal Associate; and Mr. Akshay, Associate. Pooja Ramchandani, Partner; and Mr. Vaibhav Bhardwaj, Senior Associate; advised on employment law related aspects of the transaction.
As a part of the transaction, IPG entered into an agreement to acquire a majority stake in Capstone, a newly-formed enterprise in India, which is expected to lead to a greenfield investment by Capstone. IPG will be partnering with the current shareholders of Capstone, who are also the shareholders of Airtrax. The existing business of Airtrax will be demerged into Capstone through a court process.
IPG will ultimately acquire a 55 percent interest in Capstone for a cash consideration of approximately USD 13 million. The current shareholders of both Airtrax and Capstone will contribute in kind the net assets attributed to Airtrax's existing woven product manufacturing operations, which are estimated to have a value of approximately USD 12 million. The completion of these transactions is subject to customary conditions.
The parties involved in the transaction were Airtrax Polymers Private Limited, Capstone Polyweave Private Limited, Anil Jain and Raj Jain (promoters of these two companies) (Our Clients) and Intertape Polymer Group Inc. (Counter Party).
Other advisors to the transaction were Cyril Amarchand Mangaldas (Legal advisor for IPG), PwC (Financial and tax advisor for IPG); KPMG (Financial and tax advisor for the Indian client) and Tecnova (Investment Banker for the deal).
The deal is valued at approximately USD 25 million. The deal was signed on June 14, 2017 and the closing will take place in tranches, with the final closing expected in December 2017.
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