- Warren Buffett’s Berkshire Hathaway owned, Duracell Inc. has toppled their rivals Energizer Holdings and is all set to acquire BM Khaitan’s flagship Eveready Industries’ battery and flashlight business in a low sale for Rs. 1,600-1,700.
- The deal will make Duracell the owner of Eveready brand in India and will own an annual installed capacity of 1.5 billion batteries and over 20 million flashlights per year. This business records a revenue of roughly Rs. 900 crore.
Warren Buffett’s Berkshire Hathaway owned, Duracell Inc. has toppled their rivals Energizer Holdings and is all set to acquire BM Khaitan’s flagship Eveready Industries’ battery and flashlight business in a low sale for Rs. 1,600-1,700. This deal includes manufacturing plants, distribution network, and the Eveready brand.
This all-cash deal is in the last stages of negotiation and will be announced soon. This deal is expected to help the company remove all the debt they are into.
The transaction came after months of talks between the Khaitan family and Duracell along with Energizer which owns the Eveready brand in US and China.
The deal will make Duracell the owner of Eveready brand in India and will own an annual installed capacity of 1.5 billion batteries and over 20 million flashlights per year. This business records a revenue of roughly Rs. 900 crore.
The proposed offer by Duracell for the battery and flashlight business will not include the Eveready Industries’ lighting, confectionery, electrical appliances, and fast-moving consumer goods (FMCG) joint venture clocking a cumulative turnover of Rs. 500-600 crore. This deal can help Khaitan’s scale up the residual business in the upcoming years.
This deal also excludes the non-core real estate of the company which includes the Kolkata office at Rainey Park and lands in Chennai and New Delhi. The head office in Kolkata and lands in Chennai and New Delhi has valued at Rs. 200 crore as tracked by a group of market analysts.
The company will continue to leverage the brand and the distribution network for its lighting and appliances business on a royalty-free basis.
The group which is facing cash crunch right now is trying to lower down its assets including the tea gardens in India and overseas in order to pay off the lenders. Few lenders such as Yes Bank converted part of their exposure to equity in McLeod Russell recently.
Eveready is the largest maker of dry-cell batteries in India and it saw a 63 percent decline in the net profit to Rs. 6.85 crore for the first quarter which ended on June 30. The profit in the following year earlier stood at Rs. 18.35 crore.
The decline is largely due to the slowdown among the rural and semi-urban markets and it came as the company recorded a 16 percent dip in operating income to Rs. 321 crore for the June quarter against Rs. 383.34 crore in the last year
This deal will come as a breeze of fresh air for the company which is deeply in debt and this deal will help them become debt-free.
