Berger International Ltd, the overseas subsidiary of Asian Paints, is to divest its 84.2 per cent stake in its Malta group company -- Berger Paints (Malta) Ltd (BPM) -- for around Singapore dollar 1.8 million [Rs 4.7 crore (Rs 47 million)].
"Our operations in Malta has no strategic fit, as it is our only subsidiary in Europe and its contribution to the group's sales is not significant," BIL Chairman Jalaj Dani said in a release on Thursday.
Further, the paint market in that country is "small" and has not been growing in the past few years, it said, adding the subsidiary has also been taken up "disproportionate" management time.
The company has signed an agreement for the divestment of the stake with Van Gee Bee Ltd and its associates, who hold the remaining stake in BPM, it said.
BIL had invested around S$1.51 million (Rs 40.5 million) for the 84.2 per cent stake in BPM during the financial year 2003.
The transaction is not expected to have any "material impact" on the earnings per share of BIL, while the company would enter into a new technical service and trademark licensing agreement with BPM, it said.
It would continue to receive royalties for the services and use of trademark, and the company would continue its focus on emerging markets to drive sales growth of the group.
BIL is listed on the Singapore Stock Exchange and has no operations in India, while Asian Paints has a controlling stake in the company.
