Uniply Industries Ltd has decided to sell its plywood division to UV Boards Ltd in a cash-and-stock deal that could help it acquire a majority stake in its associate company.
The two Chennai-based companies said in stock-exchange filings that Uniply will sell its plywood business to UV Boards for a total of Rs 300 crore (about $47 million).
As part of the deal, UV Boards will issue shares worth Rs 111 crore to Uniply and pay Rs 36 crore in cash. Besides, it will spend Rs 42 crore to take over Uniply’s Gujarat facility and Rs 75 crore over 10 years for the licence to use Uniply’s trademark. UV Boards will also take over Uniply’s working capital liabilities.
The share allotment will increase Uniply’s stake in UV Boards to 37.11% from 8.79%. This has triggered an open offer as per regulatory requirements.
Uniply made an offer over the weekend to acquire up to 32 million shares of UV Boards, or a 26% stake, from public shareholders at Rs 25 apiece, totaling Rs 80 crore. The offer price is lower than the last closing price of Rs 26.75 apiece.
If the open offer fully succeeds, Uniply’s stake in UV Boards will increase to 63.11%.
Uniply also said the deal to sell its plywood business will fully deleverage its consolidated balance sheet as it will be able to repay its entire long-debt of Rs 145 crore.
This is the third merger and acquisition transaction for Uniply over the past year and a half. In March last year, it had acquired the plywood and block board unit of Euro Decor Pvt. Ltd for Rs 42 crore.
In September last year, Uniply agreed to acquire architectural design firm Vector Projects (I) Pvt. Ltd for Rs 64.12 crore ($9.5 million) in a cash-and-stock deal.
Apart from plywood, Uniply makes and sells laminates and allied products in India. It has a network of about 900 dealers across India. The company posted revenue of Rs 161.69 crore in 2016-17 and a net profit of Rs 7.3 crore, according to stock-exchange data.
Uniply competes with the likes of Century Plyboards (I) Ltd and Greenply Industries Ltd, which is backed by private equity firm WestBridge Capital Partners.