Spentex acquires Tashkent To´yetpa Tekstil LLC, Uzbekistan

Spentex Industries Ltd has announced that in the largest ever cross border acquisition in textiles domain, the Company has acquired the business of Tashkent-To´yetpa Tekstil Ltd (TTTL), a state owned spinning company in Uzbekistan. The Company acquired Tashkent-To’yetpa Tekstil Ltd under the privatisation programme of Government of Uzbekistan at a consideration of USD 81 million. The Government of Uzbekistan has given the Company a number of incentives including 15% discount on raw cotton, exemption on corporate taxes, customs duty and VAT.

TTTL with a combined capacity of 220,000 spindles and 236 air jet looms catapults the Company as the India largest spinning enterprise with an installed capacity of over 570,000 spindles. The Company formed a subsidiary Spentex Tashkent Toytepa LLC in Uzbekistan. The key highlights of the transaction are as follows:

- The transaction comprises acquisition of two manufacturing facilities located in the cities of Tashkent and To’yetpa. These two state-of-the-art plants are the largest yarn manufacturing facilities in Central Asia with an installed capacity of 220,000 spindles and a weaving capacity of 236 air jet looms.

- The acquisition consideration of USD 81 million would be payable over a period of 4 years.

- The transaction is the first direct investment by an Indian company into the Republic of Uzbekistan.

- Largest foreign direct investment in the textiles industry in Uzbekistan in recent times.

Speaking on the occasion, Mr Mukund Choudhary, Managing Director, of the Company said "The acquisition of these plants is in line with our inorganic growth strategy. Uzbekistan is World’s fifth largest cotton producer with 4% share of total output. With proximity to Eastern European markets and availability of quality cotton locally, it makes strategic sense for the Spentex to be present in Uzbekistan. Spentex would also benefit from low labour and power cost in Uzbekistan. The transaction is shareholder value accretive and would enable to emerge as a leading spinning enterprise globally in the next few years."

ICICI securities were the sole strategic advisor on the transaction.

Further the Company has informed that Investment Committee constituted by the Board of Directors of the Company has also approved the following:

1. To incorporate Companies viz. in the name of Spentex Tashkent Toytepa LLC., Spentex (Singapore) Pte Ltd., Spentex (Netherlands) BV as Company´s subsidiaries.

2. To acquire the business of Tastikent To´yetpa Tekstil Ltd, the state-controlled spinning entity in Uzbekistan having two manufacturing facilities located in the cities of Tashkent and To’yetpa with a capacity of 220,000 spindles and 236 Air jet looms at USD 81 million in installments through Company´s subsidiaries.

3. To invest upto USD 12.00 million in the Company´s subsidiary(ies) to fund the initial equity contribution.

Source : Equity Bulls

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