Asahi Glass in talks to buy out partner Labroo in Indian JV

NEW DELHI: Japan’s Asahi Glass, which owns a little over 22% of Asahi India Glass, is in advanced discussions to buy out partner Sanjay Labroo as part of a plan to take control of the joint venture, two people familiar with the matter said.
Labroo and his family own an equal 22.21% stake in the local auto glass manufacturing venture. Maruti Suzuki owns a little over 11%, which it will continue to hold, the people said.

“After a protracted negotiation of over nine months, Asahi is likely to pay about Rs 2,500 crore to buy out Labroo and his family members, valuing the company at about Rs 12,500 crore,” said one of the people.

“The deal is expected to close at between Rs 475 and Rs 525 per share. This is at a significant premium to the price of Rs 180 a share late last year when the discussions had started,” he added.

On Thursday, the stock closed 2.7% lower at Rs 404.50 on the BSE. Under the proposed deal, after buying out Labroo’s stake, Tokyo headquartered Asahi Glass would make an open offer for another 26% that, if fully subscribed, would cost another Rs 3,000 crore, the second person said.


In the past month, Asahi India’s shares have gained more than 30% in anticipation of a transaction. Its current market capitalisation is Rs 9,833 crore. An Asahi India spokesperson strongly denied the news.

“The company wishes to clarify that the rumours regarding the Japanese partner buying out the Indian promoter's stake in AIS is completely untrue and baseless,” said the spokesperson.

The company denied any such development in stock exchange filings too. But, according to the people ET spoke to, the transaction that is likely to complete in December or early 2018 will cost the Japanese major about Rs 5,500 crore, including the open offer. Once completed, this will probably be the largest investment in the auto ancillary sector by an individual company, said an investment banker in the know.

This is a reflection of Japanese interest in the Indian market, the banker added. Earlier this year, Japanese auto components maker JTEKT bought out Indian partner Sunjay Kapur in Sona Koyo Steering Systems for Rs 419 crore and subsequently made an open offer to public investors. Asahi India reported a consolidated profit of Rs 131 crore on a turnover of Rs 2,402 crore in 2016-17.