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Japan's Kokuyo to buy Camlin in Rs366cr dealMay 31, 2011, 12.34am IST 

MUMBAI: Japan's Kokuyo Co will pick up 50.3% in India's leading stationery 

manufacturer, Camlin, for Rs 366 crore, in a deal to be executed in three

tranches.

Kokuyo S&T Co (Kokuyo), a wholly owned subsidiary of Kokuyo Co, will initially 

acquire 10% of the share capital of Camlin through a preferential allotment of 

shares at a price of Rs 85 per share. The Japanese stationery major will then

purchase 20.3% from the promoters for Rs 110 per share. It will subsequently be

required to make a mandatory open offer to shareholders to acquire up to 20%

more, in accordance with Sebi's Takeover Code, for Rs 110 per share. This

amounts to an aggregate acquisition price of shares of the transaction at around

Rs 366 crore.

The founding family of Camlin, the Dandekars, will retain a stake of 13.3% in the

company post the acquisition of shares by Kokuyo. The promoters will get around

Rs 150 crore for offloading a substantial part of their 38.1% holding to Kokuyo.

Dilip Dandekar will continue as chairman and managing director and Shriram

Dandekar as executive director of the company, which is expected to undergo a

name change as well. "It has been our stated intent to scale revenues, and

increase our portfolio of products through line extensions. We believe thatKokuyo Co and Camlin have complementary product portfolios and this joint

 venture will facilitate faster rollout of a portfolio of products by Camlin," said

Dilip Dandekar, CMD, Camlin, which makes pencils, inks, pens, geometry sets

and pastel colours.

Kokuyo, which will bring in managerial, marketing, manufacturing and product

research and development skills to the table, will have the right to nominate four

directors on the board of Camlin.

In anticipation of the deal announcement, the Camlin scrip touched a 52 week 

high on Monday (Rs 85.90) before closing at Rs 80.80, up 0.81% compared to the

previous day's close. TOI had reported about the deal on April 28 and May 29 this

 year.

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Camlin is one of the strongest Indian brands in the stationery industry with a 80

 year history, having an annual turnover of over Rs 358 crore, while Kokuyo Co is

a leading Japanese company with over 100 years of experience in stationery and

furniture products, design and construction of office and store interiors, mail

order business, lifestyle retail and distribution. It has an annual turnover of over$3.2 billion.

The deal will facilitate the entry of Kokuyo's products, primarily paper and office

stationery, into the Indian market. It will also open opportunities for joint

exploration of increasing exports for Camlin products to other countries. "In  Asia, 

our common strategy in each targeted market is to build our own value chain to

 win the growing domestic demand of each market. Further, our goal in the future

is to develop into an Asian corporation where products on each value chain in

each country merge into each other through our distribution network across Asia. As a result, we are targeting 30% or more from overseas in our total sales in ten

 years," Koyuko said in a release.

 While Kokuyo would capitalize on the brand power of Camlin to market its

products in India, it also intends to consider selling products of European,

 American, Japanese and Chinese stationery manufacturers through Camlin's

three lakh-strong distribution channel which it will acquire. Camlin's channels

 will be used as distribution hub for such manufacturers.

Devyani Khanvilkar, ED, Kotak Investment Bank, said that since the stationery 

industry in the country is largely unorganized, "this deal could be the beginningof a wave of consolidation in this space". The Kotak Mahindra Bank's investment

 banking arm was the sole financial advisor to the Japanese acquirer.