Shares of Escorts fell 5.5% to Rs 1,704 on BSE during Monday’s intraday trading. The stock has fallen 8% over the past two trading days, with Japan’s Kubota Corporation’s open bid to acquire an additional 28.42% stake in the company ending today. The stock had reached a record high of Rs 1,927 on December 31, 2021.
On November 18, 2021, the board of Escorts had announced that Kubota would acquire 37.49 million equity shares, or 28.42% of the expanded voting stock. The open offer price has been set at Rs 2,000 per share. The open offering for the tender shares opened on March 14, 2022 and closes on March 28, 2022.
The offer of shares contributed by the public shareholders will be accepted on a pro rata basis, subject to the acquisition of a maximum of 37.49 million shares. However, there can be no assurance that all of the Equity Shares tendered by the Public Shareholders to the Tender Offer will be accepted. Shares not accepted will be returned to public shareholders. About 43.62 million shares have been tendered to the open offering through March 25, 2022, according to a disclosure made by the stock exchange Morgan Stanley India.
Escorts is engaged in the manufacture of engines for earthmoving and material handling machinery, agricultural tractors, hydraulic shock absorbers, internal combustion engines, etc. used by railways. Kubota is the Japanese agricultural machinery and construction equipment giant which owns 9.09% of the capital of Escorts. Kubota is expected to increase its stake to 53.5% through preferential stock issuance, open offering and stock reduction.
Meanwhile, Escorts Agri Machinery (EAM) had reported a 45.6% year-on-year decline in tractor sales to 6,114 units in February 2022 from 11,230 tractors sold in February 2021. at the base high from last year, sharp price increases due to commodity price inflation and higher than normal inventory levels with the channel,” Escorts said in a statement.
Going forward, the company expects higher rabi plantings this year, a good level of water reservoirs, increased Union budget allocations to the rural and agricultural sector and normal trends in monsoon are positive triggers for the tractor industry in the coming year.