Japanese lighting equipment major Matsushita Electric Works today overcame a serious challenge from French giant Schneider Electricals SA to announce the acquisition of an 80 per cent stake in Anchor Electricals, India's largest electrical switches and accessories maker, for Rs 1,751 crore in cash.
The purchase price paid by Matsushita is 90 per cent more than Anchor's sales of Rs 920 crore last year.
The deal, which values the unlisted, closely-held Anchor Electricals at nearly Rs 2,200 crore, will help the Japanese company emerge as the country's largest electrical construction materials firm with a 70 per cent market share.
Matsushita currently has just over a 1 per cent share in the Rs 2,300 crore electrical switches and accessories market.
The Anchor group, which is also into fast-moving consumer goods, had put its electrical business on the block in the middle of last year.
Schneider, which was the front-runner in the race, pulled out later because it wanted to expand its European markets first. It had also been keen on full management control but the Shah group wanted to continue with a minority stake.
Kotak Investment Banking advised the Shah family while Lazard advised Matsushita on the deal. Ernst & Young was involved in the due diligence process for Anchor.
Matsushita Electric Works manufactures building materials and lighting equipment and is a part of Matsushita Electric Industrial Co, the world's largest consumer electronics maker and owner of the Panasonic brand. It posted a turnover of Rs 25 crore ($6 million) last year.
The Shah family, promoters of Anchor Electricals, will continue to hold a 20 per cent stake with four board representatives while Matsushita will have six members on the board.
"The venture is very significant to us as overseas business expansion is the top priority for enhancing Matsushita Electrical Works' potential for growth. The association with Anchor will help Matsushita to further strengthen its number one position and leadership in the Asian markets," Toshihide Arii, who will be chairman of Anchor, said in a press conference here today.
Matsushita planned to recoup the cost of buying Anchor in seven years, Arii told reporters. The Osaka-based company expects the Indian business to generate 15 per cent of its overseas revenue.
Atul Shah, managing director, Anchor Electricals, said, "The association with Matsushita will help us ramp up our international operations and further strengthen the Indian business by sharing key technologies and product line-ups."
Anchor posted sales of Rs 920 crore last year. This is expected to grow to Rs 1,800 crore by 2010-2011 and to Rs 9,000 crore by 2020-2021.
