The board of directors of JK Tyre & Industries Ltd. on Monday approved the merger of its unit Cavendish Industries Ltd. into the parent via a share swap agreement.
As part of the amalgamation, Cavendish Industries' shareholders will receive 92 shares of JK Tyre, which will have a face value of Rs 2 each, for every 100 shares of Rs 10 face value that they hold in the company.
This share exchange ratio is based on a report shared by PwC Business Consulting Services LLP., and a fairness opinion shared on it by ICICI Securities, JK Tyre said in an exchange filing.
The merger, which is subject to regulatory approval, will lead to a slight modification in the shareholding pattern. The promoters' stake in JK Tyre will reduce from 50.55% to 49.31% after the amalgamation, the filing added.
Cavendish Industries, earlier a unit under Kesoram Industries, was acquired by JK Tyre for Rs 2,195 crore in 2016.
Since both the entities are engaged in same line of business, the amalgamation will "result in all the businesses being housed in one listed company", JK Tyre said. The move will also lead to economies of scale, operational synergies and efficiencies at multiple levels, it added.
As of June 30, 2024, the total assets of Cavendish Industries stood at Rs 4,003 crore, whereas the net worth was measured as Rs 1,009.7 crore, the filing noted.
The merger announcement was made by JK Tyre post the market hours on Monday. The company's scrip settled 0.27% lower at Rs 442.35 on the NSE, as compared to a 0.11% climb in the benchmark Nifty 50.
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