INSUBCONTINENT EXCLUSIVE:
Shares of Sterlite Technologies rallied more than 4 per cent on Monday after the company said one of its subsidiaries will acquire
Metallurgica Bresciana (MB), a European specialised optical cable manufacturer, for 47 million euros in an all-cash deal.
The scrip was up
4.57 per cent at Rs 303.30 at around 9.30 am (IST), whereas BSE Sensex was up 201 points, or 0.56 per cent, at 35,859.
The acquisition,
which will be done through Sterlite Technologies' wholly-owned Italian subsidiary Sterlite Technologies SpA, is earnings per share (EPS)
accretive and the deal is expected to be closed in the coming two weeks, Sterlite said in a BSE filing.
"The acquisition is an all-cash deal
for approximately 47 million euros, which is being funded through a combination of euro debt instruments and internal accruals," it
added.
Metallurgica reported revenue of 48.7 million euros and net income of 4.2 million euros at the close of 2017.
"The acquisition will
significantly expand Sterlite Tech's market presence in Europe
It will bring new tier-1 customers, augment product portfolio, and enhance flexibility and ability to better serve the European market," the
an upside of more than 65 per cent from the current market price.
The brokerage house said the acquisition is positive for Sterlite
Technologies as it will help deeper penetration into European market
MB has long experience in servicing telco operators in Europe
Sterlite Technologies has increased its focus in Europe in last 2 years to reduce its dependence on China (revenue contribution is already
Sterlite Technologies will borrow foreign loans to fund this acquisition
We expect D/E to rise marginally to 1.1x in FY19 from 0.8x last year
Last month, the Fed raised its key interest rate by 25 basis points to between 1.75 per cent and 2 per cent , and expects to increase
borrowing costs two more times this year.
