GMM Pfaudler Ltd, the Indian unit of US-based Pfaudler Inc., said Thursday it will acquire a majority stake in the group’s global business from a German private equity firm.
The company said in a statement it will acquire a 34.4% stake in the global business of Pfaudler Group while its Swiss unit, Mavag AG, will purchase 19.6% for a total of $27.432 million (about Rs 206 crore).
As part of the deal, GMM managing director Tarak Patel and director Ashok Patel, part of the company’s promoter group, will buy another 26% of the global business. They will likely shell out around $13.2 million.
The balance 20% shareholding in Pfaduler Group will remain with Pfaudler International, which is ultimately owned and controlled by private equity firm Deutsche Beteiligungs AG.
Pfaudler Inc. currently owns a 50.44% stake in the Mumbai-listed company while the Patel family and other local promoters hold 24.56%.
GMM Pfaudler said the deal involves the acquisition of the group’s businesses in Germany, Italy, the UK, the Netherlands, Singapore, Brazil, Mexico, China and a newly formed entity in the US.
The acquisition is subject to various regulatory approvals in Germany, France, Austria, Slovakia, the US, Italy and Brazil. It will take about four-five months to be completed.
GMM claims to have undertaken this proposed acquisition at an arms-length basis as the transaction falls under the purview of a related-party transaction. The company also obtained an independent valuation report from KPMG India for the purpose of the said acquisition.
The company cited similar businesses and industry focus of GMM and Pfaudler Group as among the reasons for undertaking the group restructuring. Diversification of products, geographies, clients and industry exposure are other reasons.
“There is a significant overlap in the businesses undertaken by GMM and the Pfaudler Group. It is expected that the proposed transaction will create significant cost synergies due to economies of scale, value engineering and the ability to leverage the strengths of both companies in their respective markets,” GMM said.
It further said the proposed transaction would bring in new products, better technologies, customers and industry segments and key brands in its portfolio.
“The Pfaudler Group has significant presence in various jurisdictions comprising 12 manufacturing facilities in eight countries. With this acquisition, GMM would now have access to markets in other countries as well,” it said.
Alvarez & Marsal acted as the financial adviser while Trilegal acted as the legal adviser to GMM.
GMM makes corrosion-resistant equipment mainly used in the chemical and pharmaceutical industries. It has diversified its product portfolio to include mixing systems, filtration and drying equipment, engineered systems and heavy engineering equipment.
The key products manufactured by the Pfaudler Group are glass lined and alloyed equipment, fluoropolymers, sealing technologies, filters and dryers, engineered column systems, lab and process glass.
Shares of GMM declined 1.21% on the BSE on Thursday to close at Rs 5,878.55. The stock has jumped four-fold from the lows of March this year. In the last 52 weeks, the stock has touched a high of Rs 6,913.85 and low of Rs 1,357.50.