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| New fire |
Mumbai, July 1: ITC has acquired a 74 per cent stake in safety matches company Wimco for around Rs 200 crore. The deal, signed in London today, boosts the cigarette major?s grip on the matches industry, which has so far been dominated by companies from the unorganised sector.
The transaction has been executed through Russell Credit, which will buy 10,40,000 equity shares from Swedish Match. ?Russell intends to delist Wimco shares from exchanges by making an offer to the other shareholders through book building,? the company told BSE.
Wimco?s flagship brand ?Ship? competes with ITC?s AIM, Delite, IKNO and Mangaldeep in a market that is shrinking worldwide. Even Wimco has been suffering losses.
?Swedish Match continuously reviews its global strategy for all its product groups and geographic areas. It has concluded that the deployment of its resources in other geographic and product areas is more in line with its strategic direction than investing in the Indian match business,? the Swedish company said.
In October 2000, the Jatia group sold its 21.89 per cent stake in Wimco to Swedish Match AB and its Singapore arm. Later, the buyers offered to buy another 20 per cent at a price of Rs 35 per share. It had the right to acquire an additional 6 per cent, subject to approval by the market regulator.
Analysts say that Swedish Match was finding the open offer too expensive and, therefore, decided to exit India. Sources close to Wimco, however, denied this.
Swedish Match makes snuff and chewing tobacco, cigars and pipe tobacco brands, apart from matches and lighters. The group had sales of Rs 7,500 crore in 2004-05, 11 per cent of which came from matches. The Indian subsidiary of the Swedish company had a turnover of Rs 130 crore.
Under the plan cleared by the board, Swedish Match will also transfer fully paid-up redeemable cumulative preference shares of Rs 100 each to Russell Credit. The deal will be closed by the fourth quarter of 2005-06.
Wimco had suffered a net loss of Rs 1.57 crore in the last quarter of 2004-05 against a loss of Rs 14 lakh same time previous year. Net sales dipped to Rs 27.31 crore from Rs 38.18 crore. Operating loss rose to Rs 3.58 crore from Rs 1.73 crore.
