US-based Duracell Inc. is set to buy Eveready Industries’ battery and flashlight business in a slump sale for Rs 1,600-1,700 crore, according to a report by the Economic Times.
The deal between Duracell, owned by Warren Buffett’s Berkshire Hathaway, and BM Khaitan’s flagship firm Eveready is reportedly in the final stage of negotiation and is expected to be announced soon.
The all-cash deal includes the manufacturing plants, distribution network and the Eveready brand, said the report. Post the completion of the transaction, Duracell will reportedly own the Eveready brand in India, while also becoming owners of an annual installed capacity of 1.5 billion batteries and over 20 million flashlights per year. The businesses generate a revenue of roughly Rs 900 crore, said the report.
The Khaitan family has been in talks with Duracell as well as another company, US-based Energizer Holdings, for months now regarding the sale of Eveready’s key businesses in an attempt to clear the company’s debts. The promoters own 45% of the publicly traded company, which is a part of the diversified Khaitan-led Williamson Magor group with interests in tea, engineering and consumer products. The cash-strapped group has been reportedly trying to sell assets, including tea gardens, in India and overseas to pay off lenders.
According to the report, Duracell’s proposed offer excludes Eveready Industries’ lighting, electrical appliances, confectionery and a fast-moving consumer goods (FMCG) joint venture that clock a cumulative turnover of Rs 500-600 crore, and the company’s non-core real estate including the Kolkata office at Rainey Park. “Eveready Industries will continue to leverage the company’s brand as well as the distribution network for their lighting and appliances business on a royalty free basis,” a source was quoted as saying in the report.
The report highlighted that the deal, coupled with the residual business of lighting and appliances and non-core real estate, pegs the enterprise value (EV) of Eveready Industries at roughly Rs 2,500 crore compared with the company’s current EV of Rs 700 crore and market cap Rs 550 crore.
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