Videocon Industries today signed an agreement to acquire the entire 91.25 per cent stake in Swedish major AB Electrolux’s Indian subsidiary Electrolux Kelvinator Ltd (EKL).
The deal involved the sale and marketing rights of all three Swedish brands — Kelvinator, Allwyn and Electrolux. In return, AB Electrolux will receive 5 per cent stake in Videocon Industries at $94 million (Rs 410 crore).
AB Electrolux will pick up this stake in Videocon Industries by subscribing to its global depository receipts (GDR) at $10 per GDR (each GDR representing one underlying equity share of the Videocon Industries). The entire process is expected to be completed by this week.
A media statement released by Videocon said the “relationships” would lead to a annual trade of over Rs 6,000 crore in next three to five years.
The acquisition, along with the proposed merger of Videocon International with Videocon Industries, will help create an entity with a sales turnover of Rs 17,500 crore, more than half of which will come from the global activities.
Videocon will also invest Rs 300 crore to upgrade the facilities for the manufacturing of electric motors and the compressors for refrigerators in next three years.
It will finance the expenditure through the internal accruals. It has also committed to spend Rs 100 crore on advertisement, publicity and sales promotion for the Electrolux brands in India in next five years.
AB Electrolux will source the components from India for its global operation and original equipment manufacturing actitivities by Indian outfit for Electrolux’s global market in next five years.
Videocon would continue to get support from Electrolux’s design and R&D facilities for launching various high-end models of washing machines and refrigerators in Indian market, the release added.
EKL has facilities at Shahjanpur in Rajasthan, Warora and Butibori in Maharashtra. It has over 1,200 employees.
Last week, Videocon acquired the colour picture tube business of Thomson. The French major will pick up a 14 per cent stake each in Videocon Industries and Videocon International.