Rs 2,000-crore deal is the largest overseas buyout for Japan co
MumbaiApril 23Matsushita Electric Works (MEW) of Japan, owners of the National and Panasonic brands, has acquired 80 per cent equity stake in the privately held Anchor Electricals for Rs 2,000 crore.
The deal is the largest overseas buy out for MEW, the previous one being a German company for around Rs 1,000 crore.
Anchor is the market leader in the Indian electrical accessories and wiring devices market with annual sales exceeding Rs 900 crore.
Following the transaction, Anchor will become a consolidated subsidiary of Matsushita Electric Works, Ltd. "There is no option to acquire 100 per cent stake," said Mr Atul Shah, Managing Director, Anchor Electricals Pvt Ltd.
After the deal, there will be six members on the board from MEW and four from Anchor Electricals.
MEW will introduce new products such as home appliances, lighting, home automation, interior design solutions and security systems and security products in India. It will also look at improving the manufacturing efficiency.
Post the joint venture, the Anchor brand name and logo will continue.
Mr Shah said the focus will be to expand the market share and bring products which will fetch higher margins.
The funds will also be used to help the consumer business of Anchor grow, he added. Anchor is eyeing 100 per cent growth in the next four years and a 500 per cent growth in the next 10 years.
The price-earnings ratio for the deal is 15 times the 2006-07 earnings. However, the deal valuation cannot be compared to any other player in the space as the electrical accessories and wiring market is in the unorganised sector, said Mr Shah. Anchor currently enjoys between 60-70 per cent market share in India, he added.
Aims top market share
"The strategy of MEW is to gain top market share in wiring devices with Anchor," said Mr Toshihide ARII, Chairman of the new joint venture.
"We expect 20 per cent year-on-year growth after the joint venture," he added.
Anchor Electricals Pvt Ltd recorded net sales of Rs 922 crore for the year ended March 2006 and net profit of Rs 187 crore. MEW's sales stood at $13.7 billion for the year ended March 2006.
Lazard India advised Matsushita on the transaction while Kotak Mahindra Capital Company was the financial advisor for Anchor Electricals and Ernst and Young did the due diligence for Anchor Electricals. MEW will raise the funds for the acquisition internally.