Paint major Berger Paints on Tuesday said it will acquire a city-based firm, engaged in manufacturing and supplying of a wide range of construction chemicals and related materials for civil construction industry, for an enterprise value of Rs 167.5 crore.
The paint manufacturer, in a stock exchange filing, said its board of directors approved the purchase of 95.53% of the paid-up equity share capital of the firm, STP Ltd (STPL), in an all-cash deal. The balance 4.47% of the paid-up equity share capital of STPL will be held by the existing shareholders of the firm, which had posted Rs 174.02 crore total revenue in last fiscal.
"The transaction is likely to be completed within November 30, 2019 subject to the parties agreeing on terms of acquisition," Berger Paints said in a statement. It added that the business and expertise of STPL can gainfully supplement the company's existing businesses, where the two entities can combine their strengths and collaborate in the areas of manufacturing, selling, distribution, procurement and technology.
The construction chemicals maker, incorporated in 1935, has six manufacturing facilities backed up by four regional offices, host of branches and a pan-India network of dealers and applicators. Apart from construction chemicals, the firm produces concrete admixtures, waterproofing chemicals, flooring compounds, bitumen and coal tar based products.
On Tuesday, Berger Paints' scrip rose 0.31% to end the day at Rs 478.30 on the Bombay Stock Exchange, while the benchmark BSE Sensex closed higher by 0.76%. The company declared the proposed acquisition within normal trading hours.
The paint major had reported a 31.77% year-on-year jump in its consolidated net profit to Rs 176.41 crore for the first quarter this fiscal, while its revenue from operations during the quarter grew 15.75% y-o-y to `1716.53 crore.
Notably, the company had completed acquisition of Chandigarh-based speciality coatings firm Saboo Coatings (SCPL) in June, 2017. After that acquisition, the firm, earlier owned by Saboo Business Group, had become a 100% subsidiary of the paint major.