Godrej Agrovet Ltd, a subsidiary of Godrej Industries Ltd, will buy majority stake in agrochemicals maker Astec LifeSciences Ltd for at least Rs 185 crore ($28 million), it said after a board meeting on Saturday.
It will initially buy 45.29 per cent stake from Astec LifeSciences' promoters for Rs 167 crore ($25 million).
Godrej Agrovet has made a mandatory open offer and depending on its response, it may buy more shares from Astec LifeSciences' promoters to ensure it gets over 50 per cent stake in the company.
The promoters of Astec LifeSciences have agreed to sell their stake for Rs 190 each. This is much lower than the ruling price of the company.
Astec LifeSciences' scrip had risen almost five times in the last one year before shedding some gains over the last month. It last traded at Rs 240.8 a share, up 0.75 per cent on BSE in a strong Mumbai market on Friday.
Godrej Agrovet has now offered to buy up to 5.06 million shares, representing an additional 26.05 per cent, for Rs 246.6 each from the public shareholders aggregating around Rs 125 crore.
The transaction is subject to conditions, including the sale of the equity shares held by the Astec LifeSciences in its wholly owned subsidiary Astec Crop Care Ltd to Ashok Hiremath and PL Tiwari, the co-promoters of Astec LifeSciences, for an aggregate consideration of at least Rs 50 lakh.
Astec Crop Care had turnover of Rs 19.12 crore for the year ended March 31, 2015, representing 7.1 per cent of Astec LifeSciences' consolidated revenue.
Started in 1994, Astec LifeSciences is into agro chemicals and pharma ingredients. It has three plants at Mahad besides a R&D unit on the outskirts of Mumbai.
The deal will particularly boost the agri-inputs business unit of Godrej Agrovet where it boasts of a strong market share in plant growth promoters, soil conditioners and cotton herbicides with a pan-India distribution channel of over 6,500 distributors.
Godrej Agrovet also has operations in areas like animal feed (where it is the largest manufacturer of compound feed in India, producing more than 1.1 million tonnes of feed and nutrition products for dairy cattle, poultry and aquaculture annually), oil palm plantations, hybrid seeds and processed poultry, where it runs a JV firm Godrej Tyson Foods.
Godrej Tyson Foods is the second-largest player in the processed poultry segment in India and known for two key brands—Real Good Chicken and Yummiez.
The firm had roped in Singapore government’s investment firm Temasek as a shareholder in December 2012. Temasek invested Rs 572 crore ($105 million then) for a 19.9 per cent stake in Godrej Agrovet through a combination of primary and secondary investment components. This is the single-largest alternative investment in the agri-business space in India.
Godrej Agrovet was valued at Rs 2,860 crore in that transaction.
KPMG Corporate Finance acted as exclusive financial advisor to Astec LifeSciences and its promoters for this transaction. Kotak Mahindra Capital advised Godrej Agrovet and is also managing the open offer.