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201514 Sep



JK Tyre & Industries have signed a binding term sheet with Kesoram Industries to acquire one hundred percent equity in Cavendish Industries (CIL). CIL houses a Tyre Business Undertaking located at Haridwar (Laksar) which manufactures a range of tyres, tubes and flaps. 


JK Group has agreed for this acquisition at an enterprise value not exceeding Rs 2200 crore, subject to conditions, wherein JK Tyre will hold the largest shareholding block and shall have substantial management control of CIL with an option to place up to 55 percent with its Associates/Group Companies. 


The acquisition is proposed to be funded, by combination of debt and internal accruals raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs 450 crore. The final transaction is expected to consummate over next few months (subject to various approvals) with definitive documentation expected to be executed between the Parties in due course of time.


The acquisition will provide JK Tyre with further impetus towards ready expansion in the truck and bus radials segment where it is a market leader as well as entry into the fast growing 2 / 3 wheeler tyre market. Accordingly, JK Tyre estimates the transaction to be strategic, revenue accretive and synergistic with its existing tyre business. 


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