Shares of Amara Raja Batteries Ltd. tumbled amid concerns about Johnson Controls International Plc's holding in the company after the U.S. auto parts maker decided to sell its power solutions business globally.
Johnson Controls sold 2 percent from the 26 percent it held to the Galla family, the promoters of Amara Raja, according to its filings. The company also terminated its shareholder and technology pacts with the battery maker.
Shares of Amara Raja fell as much as 9.8 percent, the most in nearly five months, after the announcement. That follows the sale of Johnson Controls' global power business to Brookfield and Canadian pension fund CDPQ for $13.2 billion. The deal is expected to close by June this year, according to a media statement.
Besides, whether Brookfield would continue the partnership with Amara Raja's promoters and hold shares in the battery maker or Johnson Controls would sell shares in the open market added to the investors' concerns.
Amara Raja, however, said that there will be no impact on the company's operations on account of the termination of agreements and it would continue to invest in newer technologies and nurture partnerships.
Morgan Stanley, too, said it doesn't expect any impact on the business since “Amara Raja has absorbed all critical technologies from Johnson Controls over the years”. “Johnson Controls will still hold 24 percent in the company. We will wait to learn if Johnson Controls will transfer the 24 percent stake to the entity buying its power solutions business,” it said in a note. “The higher stake of Galla family, however, would likely ensure that they will continue to have control over Amara Raja.”
Amara Raja, Brookfield and CDPQ have yet to repspond to BloombergQuint's emailed queries.
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