The Gujarat based Apollo Group, a market leader in road construction equipment business in India, has executed binding agreements pursuant to which the Ammann Group of Switzerland intends to hold a controlling stake of 70% in the consolidated road construction equipment business of the Apollo Group, valued at approximately Rs. 400 crores. The Ammann Group has decided to invest in the core business of the Apollo Group comprising asphalt plants, pavers, curb pavers, bitumen sprayers, compaction equipment, etc. The joint venture is expected to have a more robust portfolio of products and customer solutions, significant operational synergies, global market reach and cash flow generation to support growth.
Subject to the requisite approval of shareholders of GAIL and other approvals as may be required, GAIL and its wholly owned subsidiary, Apollo Earthmovers (AEML) will transfer their respective identified businesses, being the entire product portfolio of asphalt plants and the paver business to Apollo Construction Equipment Limited (ACEL) on slump sale basis for an aggregate consideration of approximately Rs. 280 crores, which will be discharged by payment on Closing as per the definitive agreements between the joint venture parties.
Presently, GAIL and AEML hold 40.6% of ACEL. AEML plans to acquire the remaining shares of ACEL from the existing shareholders being directors and promoter controlled entities prior to Closing. Consequent to above acquisition by AEML, ACEL will become a wholly owned subsidiary of AEML. Thereafter, the Ammann group will subscribe to fresh equity shares of ACEL such that the shareholding of Ammann in ACEL, becoming 'Ammann Apollo India , will be 70% and balance 30% shares of ACEL shall be held by AEML. The current management team of the Apollo group will continue to manage the joint venture and will be complemented by Animann.
The transfer of business and formation of joint venture has been unanimously approved by the Board of Directors of GAIL, AEML and ACEL in their respective meetings held on 19 December 2012. It is expected that the joint venture closing would be achieved by mid April 2013, after obtaining and subject to all necessary corporate, legal and regulatory approvals.
GAIL shareholders would benefit by value accretion owing to 30% shareholding in the ACEL, the joint venture company through AEML - the wholly owned subsidiary of GAIL.