Dixon Technologies (India) Ltd. entered into a binding term sheet with Signify Innovations India Ltd. to form a joint venture for carrying out business as an original equipment manufacturer of lighting products and accessories.
Both companies will hold a 50% each of the equity share capital each. Dixon Tech will acquire its half of the stake in the JV via transfer of its lighting business, including its entire shareholding in Dixon Technologies Solutions Pvt, a subsidiary to the JV, according to an exchange filing on Thursday.
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Signify will acquire its half of the stake in the JV for cash consideration. It will be used for acquiring Signify's LED manufacturing business, according to the filing.
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Both firms shall have the right to nominate one director on the board of directors of the joint venture until the closing of the proposed transaction. This joint venture is yet to be incorporated.
The filing said that this joint venture is expected to bolster Dixon Tech's manufacturing quality and execution and improve Signify's standing in the lighting industry.
"This partnership will further strengthen the company's foothold in the lighting business ecosystem in India in line with the Company's strategic goals," the filing said.
Shares of Dixon Technologies closed 1.84% lower at Rs 14,518 apiece on the NSE, compared to a 1.1% fall in the benchmark Nifty. The stock has risen 40.71% in the last 12 months and fallen 19,06% on a year-to-date basis.
Out of 33 analysts tracking the company, 19 have a 'buy' rating on the stock, five recommend 'hold' and nine suggest 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 14.4%.
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