Shares of India’s automobile component company Varroc Engineering Limited (VEL) zoomed over 20 per cent to hit a 52-week high of Rs 494.60 on BSE after the company announced that it has signed a Securities Purchase Agreement (SPA) with Compagnie Plastic Omnium SE of France to divest its 4-wheeler lighting systems operations in the Americas and Europe.
The divestment is part of VEL’s (Varroc) strategy to align its resources with the high value and high growth primary markets in China, India, and the two-wheeler sector globally.
The scrip opened 3 per cent higher at Rs 425 against the previous close of Rs 412.20. With a market capitalisation of Rs 6,909 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
The stock has zoomed over 34 per cent in past one month. It has been gaining for the last three trading sessions.
"The Euro 600 million transaction will see Varroc divesting its lighting System operations in the USA, Brazil, Mexico, Poland, Czech Republic, Germany, Turkey, and Morocco Varroc will also continue to operate its China JV and other international 2-wheeler businesses in countries like Italy and Vietnam and global electronics businesses in Poland and Romania," the company said.
Varroc Engineering also informed that is retaining its 4-wheeler lighting operations in Asia. The planned divestment of Varroc’s 4-wheeler lighting systems businesses in the Americas and Europe will ensure enhanced shareholders’ value, sustainable growth, and further development of its R&D facilities and engineering capabilities
Commenting on the development, Tarang Jain, Chairman & Managing Director of Varroc Engineering said: “Our immediate goal is to be future-ready with continued profitable growth in emerging sectors like the EV and high technology electronics. The divestment of our passenger car lighting operations in the Americas and Europe will be a win-win deal for Varroc and Plastic Omnium. For us, we unlock great value for all our shareholders, employees, and business partners as we plan for our next level of growth in the fastest-growing economies and auto sectors in the world. We will also continue to invest in our teams and people as we embark on the next phase of our growth."
Laurent Favre, Chief Executive Officer of Plastic Omnium, said, “Varroc Lighting Systems is a strategic addition to our business that will provide us with an extensive lighting product portfolio, a balanced footprint across best-cost countries and cross-selling opportunities. Building on our operational excellence, financial strength, and long-term vision we have identified clear levers to bring VLS to best in-class operating performance."
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