Global electronic products leader Panasonic Corporation is bailing out the Indian fire solutions company Firepro Systems from a financial crisis situation. The Japanese company will acquire 76.2% of Firepro’s shares for an undisclosed sum. The acquisition of majority stake will be done through a combination of primary and secondary transactions and the deal is likely to be concluded by late May, 2012.
Panasonic management said in an official statement that it has entered into an agreement (with Firepro) of subscriptions of allocation of new shares to a third party with its consolidated subsidiary, Anchor Electricals. “Panasonic will acquire a portion of Firepro's ordinary shares previously owned by investment companies... Following the acquisition, Firepro's management will continue to own 10.8%, and investment companies 13.0% of the company's shares. Through a third party allocation of shares, Anchor will increase its capital,” company management said in an official note.
When contacted, Panasonic Corp’s media agency said the company management will not be sharing any additional information apart from what was mentioned in the official note.
However, going by the overall health of the company (Firepro), it appears to be a distress sale and that Panasonic would have picked up the majority stake at a very significant discount to the valuations given by its existing private equity (PE) investors.
Among existing private equity investments in Firepro include AIG’s Rs 50 crore and StanChart PE’s Rs 150 crore placements in 2006 and 2009 respectively. As per reports, AIG and StanChart PE have picked up approximately 15% and 26% stake in Firepro respectively.
While AIG could not be reached, Nainesh Jaisingh, India Head of Standard Chartered Private Equity Ltd (SCPEL) did not revert to calls and text on his cell.
Earlier reports had also indicated that UTC Fire & Security, a $6.5 billion arm of United Technologies (a $54 billion diversified aerospace and building systems provider), was looking to buy FirePro for $200 million. The deal however, did not go through as the prospective buyer was not very comfortable with Firepro’s prevalent financial health.
Firepro Systems, with a topline of Rs 700 crore, is a privately held Indian company offering security and building management systems and, integrated solutions for fire protection. In 2011, the company’s business suffered a major setback owing to the economic slowdown which significantly impacted infrastructure and real estate sectors in the country. An ICRA report in September 2011 said that the Firepro was struggling with its debt position, facing stretched liquidity and delays in servicing interest obligations.
Panasonic Corporation however, sees the acquisition as a way forward in building the foundation by expanding comprehensive solutions business in India. “The move is a very major part of the company strategy in order to set the stage for strengthening Anchor's non-housing business and making it the number one general electric facilities materials manufacturer in India; also accelerating the introduction of Panasonic products into India, and expanding its comprehensive solutions business in India non-housing fields,” said Panasonic in the official note.
Panasonic management said in an official statement that it has entered into an agreement (with Firepro) of subscriptions of allocation of new shares to a third party with its consolidated subsidiary, Anchor Electricals. “Panasonic will acquire a portion of Firepro's ordinary shares previously owned by investment companies... Following the acquisition, Firepro's management will continue to own 10.8%, and investment companies 13.0% of the company's shares. Through a third party allocation of shares, Anchor will increase its capital,” company management said in an official note.
When contacted, Panasonic Corp’s media agency said the company management will not be sharing any additional information apart from what was mentioned in the official note.
However, going by the overall health of the company (Firepro), it appears to be a distress sale and that Panasonic would have picked up the majority stake at a very significant discount to the valuations given by its existing private equity (PE) investors.
Among existing private equity investments in Firepro include AIG’s Rs 50 crore and StanChart PE’s Rs 150 crore placements in 2006 and 2009 respectively. As per reports, AIG and StanChart PE have picked up approximately 15% and 26% stake in Firepro respectively.
While AIG could not be reached, Nainesh Jaisingh, India Head of Standard Chartered Private Equity Ltd (SCPEL) did not revert to calls and text on his cell.
Earlier reports had also indicated that UTC Fire & Security, a $6.5 billion arm of United Technologies (a $54 billion diversified aerospace and building systems provider), was looking to buy FirePro for $200 million. The deal however, did not go through as the prospective buyer was not very comfortable with Firepro’s prevalent financial health.
Firepro Systems, with a topline of Rs 700 crore, is a privately held Indian company offering security and building management systems and, integrated solutions for fire protection. In 2011, the company’s business suffered a major setback owing to the economic slowdown which significantly impacted infrastructure and real estate sectors in the country. An ICRA report in September 2011 said that the Firepro was struggling with its debt position, facing stretched liquidity and delays in servicing interest obligations.
Panasonic Corporation however, sees the acquisition as a way forward in building the foundation by expanding comprehensive solutions business in India. “The move is a very major part of the company strategy in order to set the stage for strengthening Anchor's non-housing business and making it the number one general electric facilities materials manufacturer in India; also accelerating the introduction of Panasonic products into India, and expanding its comprehensive solutions business in India non-housing fields,” said Panasonic in the official note.
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