Swedish Match today announced selling its entire stake in Wimco to Russell Credit Ltd, a wholly-owned subsidiary of ITC. The company, however, did not divulge the financial details of the deal. Swedish Match held 74% equity stake in Wimco, which is into manufacture of match boxes. ET reported about the ITC-Swedish Match negotiations in its edition dated June 27.
A statement by Swedish Match said it would also make an open offer for acquiring a 20% stake in the company as per a Sebi ruling in '02. The Swedish major has to make the open offer as it lost its appeal against the Sebi order in the Supreme Court. Though the exact level of current public holding in Wimco could not be known, it is very marginal.
A Russell Credit statement said the company would acquire an additional 2% stake from the Swedish Match group after the latter makes its open offer. This would take the total stake of the ITC subsidiary in Wimco to 76%.
Wimco owns brands such as Ship, Homelite and Tekka. The company has been making losses in the past two years - Rs 42.7 crore in 2004-05 and Rs 71.50 crore in '03-04. The company statement said the entire transaction (open offer and the subsequent sell off to Russell Credit) is expected to be closed no later than during the fourth quarter 2005.
Swedish Match holds its stake in Wimco through its Singapore based subsidiaries - Swedish Match Singapore Pte, Haravon Investments Pte Ltd and Seed Trading Pte Ltd.
Commenting on the transaction, ITC's corporate management committee member R Srinivasan said: “Wimco has been making losses for the last few years, with accumulated operating losses crossing Rs 60 crore. This acquisition will catalyse fresh investments in the company with attendant benefits to all stakeholders. ITC has been supporting competitiveness in the match sector through induction of technology and best practices.”