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HomeMarket NewsTega Industries shares set for reaction to acquisition almost equal to its market capitalisation
As of Wednesday's closing, Tega's market capitalisation stood at ₹13,800 crore. The acquisition will be done through a special purpose vehicle, in which Tega will hold 77%, while Apollo Funds will have a 23% stake.
Shares of Tega Industries Ltd., the producer of mill liners and wear parts, will be in focus on Thursday, September 11, after the company announced an acquisition on Wednesday in a consortium with Apollo Funds.
Tega Industries will acquire 100% stake in Molycop for an enterprise value of $1.5 billion, which is close to ₹13,000 crore.
As of Wednesday's closing, Tega's market capitalisation stood at ₹13,800 crore. The acquisition will be done through a special purpose vehicle, in which Tega will hold 77%, while Apollo Funds will have a 23% stake.
Tega will contribute $361 million or ₹3,180 crore of the deal, of which ₹995 crore will be through corporate debt, along with an equity raise of ₹2,184 crore.
The company will also hold a board meet on Saturday, September 13, to consider fund raising proposals.
Molycop is a supplier of grinding media to the mining industry, which is used to crush ore and extraction of minerals like copper and gold.
Tega makes mill liners and wear parts that work with grinding media to protect equipment and optimize grinding efficiency.
As both the companies have common customers, they can offer complementary products.
Although Molycop is 8x of Tega's size in terms of revenue, its margins are far lower.
At an Enterprise Value to EBITDA basis, Molycop trades at a valuation of 9x, while Tega trades at 41x.
Shares of Tega Industries ended lower on Wednesday at ₹2,076. The stock has risen 14% in the last one month.
