Shares of Jain Irrigation Systems surged up to 17 per cent in an otherwise weak market after the firm said its global irrigation business will be merged with Rivulis, part of Singapore-based investment fund Temasek, in a cash-and-stock deal. The move will help the firm cut its consolidated debt by Rs 2,700 crore or around 45 per cent.
The deal will help create world's second-largest irrigation player with revenue of $750 million (Rs 5,860 crore). Jain Irrigation Systems stock zoomed 17.06 per cent to Rs 43.90 against the previous close of Rs 37.50 on BSE. The stock opened with a gain of 12 per cent at Rs 42 today against the previous close of Rs 37.50.
Jain Irrigation stock is trading higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock has gained 64 per cent in a year and lost 0.24 per cent in 2022.
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Total 18.73 lakh shares of the firm changed hands amounting to a turnover of Rs 7.90 crore on BSE. The market cap of the firm stood at Rs 2,548 crore on BSE.
Jain Irrigation's global irrigation business has been valued at Rs 4,200 crore, of which Rs 2,700 crore will be used to repay its all-overseas debt and Rs 200 crore will come to the parent company, its Managing Director Anil Jain said.
In the merged entity, it will have 22 per cent equity stake while Rivulis will hold 78 per cent.
The deal is likely to be concluded in the next six months, he said, adding that the combined entity will have a revenue of $750 million.
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Currently, Rivulis has an annual revenue of $400 million while that of Jain Irrigation's global irrigation business is $350 million.
Jain Irrigation said, "Cash proceeds will be utilised for the reduction of consolidated debt of Jain Irrigation by around 45 per cent which includes all the restructured overseas bonds to the tune of USD 225 million and complete debt of overseas operating companies comprising of IIB."
Jain Irrigation Systems, a leading micro irrigation systems company, had a consolidated net debt of around Rs 6,000 crore at the end of March 2022 and out of that, Rs 3,300 crore pertained to India business.
Meanwhile, Sensex fell 583 points to 51,949 and Nifty lost 175 points to 15,463 in early trade.
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