NEW DELHI: JK Tyre & Industries has acquired Cavendish Industries a tyre, tube and flap maker for Rs 2,195 crore, opening up the growing two wheeler and three wheeler segments. The deal was completed on Monday. Cavendish is a part of Kesoram Industries, which is a unit of B K Birla Group.
“With the completion of the acquisition of Cavendish Industries we have further strengthened our position in the truck and bus radial segment. It has also given us entry into two and three wheeler vertical,” JK Tyre & Industries Chairman and MD Raghupati Singhania stated post the announcement, adding that the company will fund the deal through a mix of internal accruals and debt raised by JK group associates.
“Of the total enterprise value if 2,195 crore, Rs 700 crore is the equity and rest Rs 1,495 crore is the debt,” he said.
The acquisition will go a long way in making JK Tyre’s aspirations to become a major global player, bringing an additional capacity of 100 lakh tyres per annum in one go. Cavendish Industries operates three 3 Tyre Business Undertakings of Birla Tyres at Laksar (Haridwar) and manufactures a range of tyres, tubes and flaps at these facilities.
Through the acquisition, JK Tyre will now have an additional capacity of Truck & Bus Radials, an important and high growth segment. It will also provide JK Tyre entry into the fast growing two and three wheeler tyre market.
“The acquisition is, therefore, strategic, revenue accretive and synergistic with the existing tyre business,” said the company.
With the acquisition, the tyre maker now has 12 plants, including three abroad, with a total production capacity of 347 lakh tyres per annum.
CIL will be subsidiary of JK Tyre with majority shareholdings through direct holdings and the balance through its subsidiaries.