Godrej Agrovet acquires 45.29 per cent stake in Astec Lifesciences and made open offer to public shareholders for another 26.05 per cent

Godrej Agrovet (GAL), a subsidiary of Godrej Industries, buys majority stake in agrochemicals maker Astec LifeSciences for Rs 167.41 crore. The company initially bought 45.29 per cent stake from Astec LifeSciences promoters at a price of Rs 190 per share. It will also acquire Astec LifeSciences, wholly owned subsidiary Astec Corp Care. Astec Lifescience also approved execution of share purchase agreement in the board meeting held on August 29,2015.

Astec LifeSciences have agreed to sell their stake for Rs 190 each at much lower than the ruling price of shares at bourses. Currently promoters control 55.29 per cent stake in Astec LifeSciences. GAL made an open offer to public shareholders to acquire additional 26.05 per cent stake at a price of Rs 246.6 per share. If open offer is fully subscribed them GAL will have to shell out Rs 124.96 crore as per SEBI regulation. The mode of payment will be in cash. Depending on open offer response, GAL may buy more shares from Astec LifeSciences promoters to ensure it gets over 50 per cent stake in the company.

KPMG Corporate Finance acted as financial advisor to Astec LifeSciences and its promoters for this transaction whereas Kotak Mahindra Capital advised GAL. After the equity transaction GAL's proposed shareholding will be 71.34 per cent in the Astec Lifescience. Godrej Industries holds 60.81 per cent of shares in the GAL.

GAL's induction as a shareholder is expected to significantly enhance the Astec's growth prospects and competitive position. The deal will particularly boost the agri-inputs business unit of GAL where it has a strong market share in plant growth promoters, soil conditioners and cotton herbicides with pan-India distribution channel of over 6500 distributors. The company's consolidated revenue stood at Rs. 3795 crore. Astec's net sales stood at Rs 268 crore in FY15.

GAL is a diversified agribusiness company dedicated to improving the productivity of Indian farmers by innovating products and services that sustainably increase crop and livestock yields. It has interests in animal feed, oil palm plantations, agri-inputs and poultry. GAL has also entered Bangladesh through a JV with the (Advanced Chemical Industries) ACI Group, where it is rapidly becoming a key player in animal feed and poultry breeding. The Oil Palm Plantation business has over 51000 hectares of smallholder cultivation across Andhra Pradesh, Goa, Gujarat, Orissa, Tamil Nadu, Karnataka and Maharashtra. GAL is positioned to significantly reduce India’s crippling dependence on imported edible oil because of potential cultivation of more than 2 lakh hectares.

Astec Lifesciences is producer of agrochemicals and pharmaceutical intermediates. The Company has identified contract manufacturing as a platform. It’s products include tebuconazole, propiconazole, tricyclazole, lambda cyhalothrin, and metalaxyl. The Scale up to multi kilo level is undertaken at its versatile 50 litres to 500 litres capacity pilot plant. Astec has three plants at Mahad besides a R&D unit on the outskirts of Mumbai.

The share price of Astec Lifescience on BSE increased by 9.18 per cent in early trades and is currently trading at Rs 253. The stock price of Godrej Industries on BSE also surged by 2.01 per cent in early trades and is currently trading at Rs 369.