Pune-based Kinetic Group, the makers of the defunct Kinetic scooters, has decided to merge its two companies into one. The board of directors of both Firodia family-owned companies met on Friday and decided to merge Kinetic Motor Company Limited (KMCL) into Kinetic Engineering Limited (KEL).
The shareholders of Kinetic Motors will get four Kinetic Engineering Limited shares for every 31 shares, in a merger ratio of 7.75. After the merger, the promoter’s stake in KEL will come down from 57.49% to 52.85%.
Sulajja Firodia Motwani, managing director , KMCL, who was appointed as a vice chairperson of KEL at Friday’s board meeting told HT that the company expects approval of the stock exchanges by January 15 2012 and the court approval by June 30, 2012. She said share swap was broadly in line with the current stock price of both companies.
“This is part of the corporate restructuring move we initiated two years ago,” she said. KMCL sold its business to Mahindra & Mahindra three years ago for Rs 110 crore and 20% stake in Mahindra two-wheelers, which came into being following this deal.
“Kinetic Engineering has its powertrain and transmission business while Kinetic Motors does not have any business of its own and is an investment company with its stake in Mahindra two-wheelers,” said Motwani. “To rationalise operations we are merging both companies. Shareholders will now benefit from both our stake in Mahindra two-wheelers and our own auto component business,” she said.
Motwani said the company would like to retain its stake in Mahindra two-wheelers. Following the merger news, the share price of Kinetic Engineering rose 4% to Rs 104 on the BSE, while Kinetic Motor’s share price was marginally up at Rs 14.9.