Kubota to buy 10 per cent stake in Escorts

The leading manufacturer of agriculture-based auto and its components, Escorts Group reported that Kubota Corporation, which is a leading tractor and machinery maker in Japan, will invest nearly 10 per cent in the company.

Escorts and Kubota already have formed a 60:40 joint venture (JV). As per the further transaction, the company will issue and allot 12257688 equity shares through a preferential issue to Kubota at an issue price of Rs 850 per equity share, which will be on capital reduction basis thus, making Kubota’s investment of nearly 10 per cent. The total invested amount will be in tune of Rs 1,041 crore, which will be at 48 per cent premium to market closing price as of March 19.

Meanwhile, amid global shutdown owing to rapidly spreading Coronavirus, the company informed about closure of offices and plans in Faridabad (Haryana). The closure of the facilities will certainly have an impact on its revival in the near future. The CV industry is already going through its toughest times and this unprecedented shutdown will further have a negative implication on its financials.

On Monday, the stock lost 17 per cent of its market value from its earlier close to end the session at Rs 560 a piece on BSE.