US-based American & Efird Global LLC (A&E), one of the world’s biggest manufacturer and distributor of high-quality sewing and embroidery threads, and technical textiles, will become the majority shareholder in India-based Vardhman Yarns and Threads Ltd (VYTL), a subsidiary of Vardhman Textiles Ltd, with the latter’s board approving sale of 40 per cent stake in its subsidiary to A&E.
With the signing of this new deal, A&E, which is a portfolio company of KPS Capital Partners LP, will own 89 per cent of the joint venture, up from its existing 49 per cent stake, while its partner Vardhman Textiles Ltd will retain 11 per cent of the stakes in VYTL, after letting go of 22.8 million equity shares, which accounts for 40 per cent of its shares held by the company in VYTL.
The deal was closed on Monday, according to reports. A&E had, back in 2008, acquired the initial 49 per cent of the stakes in VYTL.
VYTL is in the business of making and distributing industrial and consumer-grade sewing threads, mostly manufacturing speciality threads across different applications.
A conglomerate with over 25 manufacturing units in five states across India, Vardhman Group’s business extends to yarn, processed fabric, sewing thread, acrylic fibre and alloy steel.
This deal comes close on the heels of the VTYL reporting an annual revenue of Rs 728.4 crore in the 2015-16 fiscal, which equates to around 11 per cent of Vardhman’s consolidated revenue. According to a company release, the reason behind Vardhman Textiles selling off its majority shares in VYTL to A&E lies in the company’s focus now shifting to strengthening its core business of yarn and fabric in Asian markets. “The business of sewing thread is a complex business and requires significant management time and attention. In addition, the business definitely gets a boost if it is aligned to a global partner or it operates globally. In view of the company’s focus on other related textile business like yarn and fabric, it was inconceivable for the company to spread sewing thread business in competition to global players,” Vardhman Textiles stated.
According to a company statement, the share purchase agreement between the two enterprises values VYTL at Rs 990 crore.
