Dixon Technologies to acquire majority stake in Ismartu India

Leading contract manufacturer Dixon Technologies (India) will acquire a majority stake in Ismartu India, a firm engaged in electronics and mobile devices manufacturing, in an all-cash deal.

The company has entered into a share purchase agreement to acquire 50.10% stake in the first tranche from Ismartu Singapore, Transsion Technology Ltd, 5A advisors LLP.

“Tranche I shares will be acquired by the company for an aggregate initial consideration amount of Rs 238.36 crore, subject to pre-closing and post-closing adjustments in accordance with the terms of the share purchase agreement,” it said.

Ismartu, which operates under brand names of ‘Itel’, ‘Infinix’ & ‘Tecno’ has three manufacturing facilities in Noida and is among market leaders in feature phones categories in India.

“The acquisition is in line with the strategy of Dixon Technologies to grow in this business segment and to achieve strategic goals and expansion of business,” said Dixon Technologies in a late-night regulatory filing on Monday.

For FY23, Ismartu India had reported a turnover of Rs 6,235 crore. The company expects to acquire 50.10% share in tranche 1 “within 90 days from the date of execution of the share purchase agreement”.

The deal also required approval from the Competition Commission of India (CCI), it added. Dixon has rights to acquire additional stake between 1.60%to 5.90% in Ismartu India, which will be done in financial year 2026-27.

“Tranche II shares will be acquired by the company in 2026-27 for an aggregate consideration which shall be determined basis a valuation of 20 times of profit after tax of the target company for FY 2025-26,” it said.

After acquisition of share in Tranche II, Dixon will hold “a minimum of 51.70% and, at its option, a maximum of 56%,” in Ismartu India. Accordingly, Ismartu Singapore will hold 42.75-47.05%, depending on the tranche II deal.

Commenting on the development, Vice Chairman & Managing Director Atul B Lall said:” The combined expertise, resources, engineering prowess and other manufacturing capabilities of both the companies will further capitalize on growth opportunities in the burgeoning Indian EMS industry.”

Dixon Technologies (India) is a homegrown firm engaged in manufacturing products in the consumer durables, lighting and mobile phones markets. In FY23, its revenue was at Rs 6,997.40 crore.

Shares of Dixon Technologies (India) were trading at Rs 7,701 apiece on BSE, up 0.85% from previous close.