Web Page: http://economynext.com/Textured_Jersey_Lanka_to_buy_Indian_fabric_maker_for_US$15mn-3-2215-4.html
COLOMBO (EconomyNext) – Sri Lanka's Textured Jersey Lanka (TJL) said it will acquire an Indian knit fabric manufacturer, owned by one of its main shareholders, Brandix Lanka, for 15 million US dollars.
TJL will pay half the price in cash and the balance through a share swap by issuing new Textured Jersey Lanka shares valued at 28.50 rupees each.
Textured Jersey Lanka, whose shares were last traded at 28.60 rupees on the Colombo bourse Monday, said the acquisition was part of its regional expansion and capacity enhancement strategy.
The company will buy all 36.6 million shares of Ocean Mauritius Ltd., the parent firm of Ocean India, which operates a knit fabric manufacturing plant in Visakhapatnam, India.
In May this year, TJL said it will acquire Quenby Lanka Prints (Pvt) Ltd, a fabric printer, for 3.5 million US dollars.
“The acquisition of Quenby Lanka and Ocean India should potentially launch TJL to the next level of solution provision and innovation while also catering to growing customer demand,” TJL said in a stock exchange filing.
It said the acquisitions should make TJL, whose major shareholders are Pacific Textured Jersey Holdings and Sri Lankan apparel exporter Brandix, one of the leading textile players in the South Asian region.
“These acquisition also offer prospects of margin improvements through business and production synergies,” TJL said.
Ocean India is a joint venture between Brandix Lanka and Leading Investment Holdings, in which the Brandix is the largest shareholder with management control, the three other partners being Jacob BAC (a subsidiary of Brandot), Compagnie Mauricienne de Textile Ltd (Mauritius) and Pioneer Elastic Holdings Ltd. (Hong Kong).
TJL is to issue 35,197, 368 shares by way of a share swap to the selling shareholders in return for the transfer of 17.8 million shares – half of Ocean Mauritius – with a cash value of just over a billion rupees (7.5 million dollars).
Brandix Lanka, which now holds 29.81 percent of TJL, will be paid 11.28 million dollars, and raise its stake in TJL to 32.11 percent with the share swap.
TJL said it has been told by Pacific Textured Jersey Holdings and Brandix Lanka – major shareholders of TJL - that they are acting in concert and agreed to maintain a collective shareholding in TJL of not less than 51 percent for five years from 1 April 2015.
Pacific Textured Jersey Holdings, which now has 39.65 percent of TJL, plans to sell about 10 percent of its stake, the stock exchange filing said.
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