IVL Takes Indian Fibers & Yarn Business, Aiming for 57% Stake from Tender Offer
IVL has purchased 31.79% of IRSL's newly issued shares, and will make a tender offer to acquire a total of 56.85% stake in IRSL.
Indorama Ventures Public Company Limited (IVL) has announced that the Board of Directors resolved to approve the purchase by its indirect subsidiary Indorama Netherlands B.V. (INBV) of 83,000,000 newly issued shares in Indo Rama Synthetics (India) Limited (IRSL), equating to approximately 31.79% of IRSL’s enlarged share capital, at the price of INR 36.00/share, equaling to the total investment amount of INR 2,988.00 million , or equivalent to approximately ฿1,442.31 million.
Following the Share Purchase, INBV would be required by the regulations of the Securities and Exchange Board of India (SEBI) to do the open offer to all of IRSL’s shares held by the minority shareholders, equating to approximately 25.06% of the enlarged share capital at the price of INR 36.00/share. The Tender Offer cost is expected to be at the maximum of INR 2,356 million, or equivalent to approximately ฿1,137.24 million.
Therefore, the total amount to be used by INBV in the Share Purchase and the Tender Offer would be at the maximum of INR 5,344 million, or equivalent to approximately ฿2,579.55 million, resulting in the maximum holding of 56.85%.
IRSL is a manufacturer of a wide range of Polyester Fibers & Yarn products, with the total production capacity of 605 KT per annum. While the decision to invest in IRSL was due to India is the second largest polyester market in the world after China, with consumption growth at 7% per year. This strategic investment will provide IVL a fast track entry into the high potential Indian market as India grows its end uses for Polyester fibers and leverage on the country’s huge potential with 1.2 billion population.
IVL’s expertise in turnaround, coupled with technical know-how will help IRSL improve its operating rate, product mix and also complement IVL’s strategy in global Home & Apparel segment to serve its global customers with differentiated HVA fibers. This transaction follows investments into PET assets in India three years ago.