Asian Paints, the country’s largest paint-maker, on Friday announced that it was acquiring majority stake in two companies – White Teak and Weatherseal Fenestration. The move comes as it looks to improve presence in home improvement and decor categories.
Both acquisitions will be made in a staggered manner over the next three years.
In case of Obgenix Software Private Limited (popularly known by the brand name of White Teak) - where Asian Paints would pick up 100 per cent stake - it would pick up 49 per cent equity for a consideration of ₹180 crore “along with an earn out up to a maximum of ₹114 crore, payable after a year, subject to achievement of mutually agreed financial milestones.”
The remaining 51 per cent would be acquired in a staggered manner, for which the consideration would be decided upon by defined financial milestones.
For instance, around 11 per cent of the equity share capital would be acquired for a maximum consideration of ₹66 crore during the financial year 2023-24; and the remaining 40 per cent for a maximum consideration of ₹360 crore during the 2025–26.
White Teak is a private limited company engaged, in the business to design, trade or otherwise deal in all types and description of decorative lighting products and fans, etc.
In case of Weatherseal Fenestration, it will pick up 51 per cent majority post infusion of ₹19 crore through a shareholders agreement and share subscription agreement. Another 23.9 per cent in Weatherseal Fenestration would be picked up in a staggered manner over the next three years.
Weatherseal Fenestration incorporated in March, 2022 is engaged in the business of interior decoration/furnishing, including manufacturing uPVC Windows and door systems.
Of the further 23.9 per cent stake that will be acquired in a staggered manner, Asian Paints would first pick up around 13.9 per cent stake during FY25; and the remaining 10 per cent stake would be acquired during FY26, it said in stock exchange filing.
“The enterprise value that would be used to compute the consideration for acquisition would be derived at a multiple of 1.5 times the net revenue of Weatherseal Fenestration or 15 times its EBITDA, whichever is lower. The revenue and EBIDTA will be based on the financial year prior to the year of acquisition,” it said in the stock exchange filing.
On Friday, Asian Paint shares closed at ₹3113.80, up 1.04 per cent, on the BSE.