Jain Irrigation Systems jumped 8.80% to Rs 40.80 after the Jain International Trading B.V., a subsidiary of the company, and Temasek-owned Rivulis entered into share purchase agreements on Tuesday.
Jain Irrigation's international irrigation business will be merged with Rivulis in a cash and stock transaction and the combined entity will have $750 million revenues. As it will have unparalleled market coverage spread across 6 continents and 35 countries driven by innovation, digital and sustainability.The merged entity will be dual headquartered in Singapore and Israel and will continue to be named Rivulis.
The cash proceeds will be utilised for 45% debt reduction in Jain Irrigation by Rs 2,664 crore on a consolidated level while allowing it to retain a significant minority stake in the merged company. Jain Irrigation will also be able to release its corporate guarantee worth Rs 2,275 crore to creditors, bondholders and IIB lenders.
Jain International business will hold 22% stake in the merged entity while Temasek will hold the balance 78%. Jain Irrigation will have a long-term supply agreement with the merged entity, which would drive revenues and profits. The merged entity will continue to use and promote prominent JAIN Brands in markets where they have significant presence and value.
Jain will have representative directors and observer on the board of the company and will be able to help its growth through its significant expertise in micro-irrigation. Jain Irrigation retains potential future value generation from the creation of this large global irrigation leader.
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Anil Jain, managing director of Jain Irrigation, commented: We anticipate that the merger with Rivulis will create a world leading player ideally placed to serve its global customer base thanks to its geographic footprint, breadth of offerings as well as technological depth and expertise in micro irrigation. This will enable us all to address climate change and food security challenges with sustainable solutions and implement the critical knowledge transfer for water efficiency and productivity for growers.
Jain added, We look forward to this value accretive long-term relationship to create meaningful positive impact in the agri and food ecosystem. At the same time, we also look forward to jointly explore collaboration opportunities with Temasek in the future of food and agriculture, including areas relating to ESG, hi-tech agricultural inputs, technology innovation, as well as solutions to benefit small holder farmers.
Richard Klapholz, CEO of Rivulis said, While benefitting from significant operational economies of scale and a dedicated, diverse employee base, we will ensure that all commitments to our grower community and to our combined business partners are maintained and further strengthened. Our goal is to ensure that all our customers will continue to be successful and benefit from a broader offering, leading industry brands, expanded manufacturing base and the support of leading irrigation services businesses. Rivulis, before the merger, represented the combination of four companies, and through this merger, several more companies from Jain Irrigation's portfolio will be added, cementing our role as a market consolidator and leader across the globe and creating a single company with a much stronger financial foundation.
Jain Irrigation Systems is engaged in manufacture of plastic products, and manufacture of fruit or vegetable juices, their concentrates squashes and powder. Its segments include hi-tech agri input products, industrial products and non-conventional energy.
On consolidated basis, the company's net profit jumped 465.7% to Rs 277.82 on a 16.2% rise in net sales to Rs 2,083.61 crore in Q4 FY22 over Q4 FY21.
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