Mumbai, Feb. 19: Electrical appliances maker Havells India is acquiring the consumer durable business of Lloyd Electric & Engineering for an enterprise value of Rs 1,600 crore.
The acquisition will mark Havells’s foray into consumer durables, and the acquisition involves both the operations of the Lloyd business and the ownership of the brand rights, logo and other intellectual property.
Lloyd, which is among the top three Indian brands in the air-conditioner category after Voltas and LG, has expanded into TVs and washing machines. It has a strong network in small towns.
The transaction is subject to confirmatory due diligence and is expected to close in the next eight weeks. Havells plans to finance the transaction through a mix of debt and internal accruals.
A Havells statement today said that the company has signed an agreement with Lloyd Electrical and Engineering Ltd and Fedders Lloyd Corporation Ltd to acquire the Lloyd brand and the consumer durable business.
The revenues of Lloyd’s consumer durable arm, Lloyd Consumer, for the nine months period ended December, 31 2016 stood at Rs 1,242 crore and are expected to touch Rs 1,850 crore for the fiscal.
While consumer spending in the country has suffered a setback after India in November scrapped high-value banknotes that accounted for more than 80 per cent of cash in circulation, analysts expect the growth to revive slowly in the fiscal year starting in April as the currency crunch eases.
This apart there is a huge potential from increasing urbanisation, aspirational and expanding middle class.
“The proposed acquisition is in line with Havells objective of Deeper into Homes, driving domestic expansion and owning a brand and distribution oriented asset. We would leverage and extend the trust associated with Brand Havells to consumers, dealers, vendors of Lloyd and create a similar recognition in consumer durables segment.
“We believe Lloyd is undergoing a journey similar to Havells of the past and we could combine together our consumer insights to accelerate its pace of growth,” Anil Rai Gupta, chairman & managing director Havells India Ltd, said on the deals.
Standard Chartered Bank was the financial adviser and AZB & Partners was the legal advisers of Havells. EY represented Lloyd as their financial adviser.
