The Hindu Business Line : Havell's buys Sylvania's lighting biz for $300 m

Acquisition pattern
All-cash deal to be funded through a mix of debt and internal accruals
Havell's Netherlands BV to raise a debt of $265 million from Barclays Bank
Company to retain SLI Sylvania's management team post-acquisition

BRIGHTER FUTURE: (From right) Mr Qimat Rai Gupta, Chairman & Managing Director, Havell's India Ltd; Mr Paul Griswold, Chief Executive Officer, SLI Sylvania; and Mr Surijit Gupta, Director, Havell's, at a press conference in the Capital on Tuesday. Havell's has acquired SLI Sylvania's lighting business for $300 million, hoping the Frankfurt-based firm's global brands will boost its international revenue. — Kamal Narang

New Delhi March 13 Havell's India Ltd on Tuesday said that it had acquired SLI Sylvania's lighting business for $300 million (about Rs 1,350 crore), making it the biggest overseas takeover by an Indian electrical equipment manufacturer till date.

"We have acquired Sylvania's lighting business for $300 million through our Dutch subsidiary - Havell's Netherlands BV. The combined revenues are expected to be around $1 billion," said Mr Anil Gupta, Joint Managing Director, Havell's India.

While, the all-cash deal would be funded through a mix of debt and internal accruals, the subsidiary would raise a debt of $265 million from Barclays Bank to fund the deal. The transaction is expected to be completed in April-May, with Havell's retaining SLI Sylvania's management team after the acquisition.

"The takeover would give us access to all the key markets in Europe, Latin America and Africa where Sylvania has a stronghold. Post-acquisition, we would target emerging markets in North Africa and Asia," Mr Gupta said.

Sylvania's presence

SLI Sylvania operates in key geographies of Europe, Latin America and Africa through 10 manufacturing facilities. The company, however, would not get access to four overseas markets, Mexico, the US, Australia and New Zealand, where the business is owned by Osram.

Sylvania Osram had earlier sold its lighting business to a consortium of three private equity funds comprising Subros, JP Morgan and DDG Capital and Havell's has acquired the business from the consortium.

Mr Gupta said Sylvania would operate as Havell's subsidiary, Havell's Sylvania, and the company would continue marketing its popular brands under the same name. Sylvania sells professional and consumer lighting brands such as Sylvania Concord Marlin, Lumiance, Claude, Zenith and Linolite-Sylvania.

"The takeover would give us a platform to market the Havell's brand in a better way through Sylvania's distribution network of over 10,000 dealers spread across the globe. We would also introduce Sylvania's lighting brands in India but are currently working on the branding propositions," said Mr Gupta. He added that post-acquisition nearly two-third of the company's revenues would come from international markets.

Currently, Havell's has eight manufacturing facilities in India and has a limited presence in Europe through its subsidiary, while Sylvania is among the top five lighting companies in key markets of Europe, including Germany and the UK.

Sylvania used to operate through a joint venture in India as Laxman Sylvania. The company had called off its India operations in early nineties. For the year ended December 31, 2006, SLI Sylvania had generated revenues of $594 million. Havell's shares jumped 6.8 per cent to Rs 476.20 in intra-day trading on the Bombay Stock Exchange.

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