Asian Paints to acquire stake in White Teak and Weatherseal Fenestration
Asian Paints Ltd on Friday said it will acquire stake in two companies —and Weatherseal Fenestration — in a move to strengthen its presence in the fast-growing home improvement and decor segment.
Asian paints will acquire 100 percent of Obgenix Software, popularly known by the brand name of White Teak, in a staggered manner over the next three years.
It has entered into "definitive agreements to acquire 49 percent stake in Obgenix Software from the promoters, for a consideration of approximately Rs 180 crore, along with an earn-out up to a maximum of Rs 114 crore, payable after a year, subject to achievement of mutually agreed financial milestones".
Asian Paints will acquire the remaining 51 percent stake in White Teak in a phased manner, "wherein 11 per cent stake would be acquired in FY 2023-24, for a consideration based on achievement of certain financial milestones, with maximum consideration of Rs 66 crore".
The remaining 40 percent stake would be acquired by Asian Paints in FY 2025-26, for a consideration based on the achievement of certain financial milestones, with maximum consideration of Rs 360 crore, a company statement said.
Set up in 2016, by Silicon Valley tech entrepreneurs Pawan Mehta and Gagan Mehta, White Teak is engaged in the business of decorative lighting products and fans. In FY 2020-21 White Teak's turnover was at Rs 37.66 crore.
Asian Paints said it will acquire a majority 51 per cent stake in Weatherseal Fenestration, a company engaged in the business of interior decoration/furnishing, including manufacturing uPVC Windows and door systems, for consideration of Rs 19 crore.
The leading paint maker has entered into definitive agreements with the promoters of Weatherseal Fenestration - Harish Munireddy and Pratibha SB- for an infusion of Rs 19 crores for a 51 per cent stake by subscription to the equity share capital of the company.
"It is also agreed to acquire an additional 23.9 percent stake in Weatherseal Fenestration from its promoters, in a staggered manner, over the next 3 years," it said.
Munireddy would continue to be the CEO and Pratibha SB as COO at Weatherseal Fenestration, leading further credence to this association with Asian Paints, the statement said, adding that post-acquisition, Weatherseal Fenestration will be a subsidiary of the company.
"Weatherseal is one of the leading brands in uPVC Windows and Doors space and has established a reputable presence in the retail and project customer segment, primarily in South India. As part of our endeavour to be an integral part of the home d cor business, we find this space attractive in the retail and B2B market segment. This association will enable us to widen our offerings in the home d cor space," Asian Paints MD & CEO Amit Syngle said.
The size of the current market is more than Rs 11,000 crore and the market share of organised players is about 40 percent.
"Therefore, the potential to innovate and enter this market is immense," said Asian Paints.
Asian Paints is a leading domestic paint company and ranked among the top ten decorative coatings companies in the world with a consolidated turnover of Rs 21,712.79 crore.
The Mumbai-based company has operations in 15 countries across the world through its subsidiaries. It has 26 paint manufacturing facilities, servicing consumers in over 60 countries.