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New Delhi : Escorts Limited (“Escorts”) and Kubota Corporation (“Kubota”), a global leader (Market Cap of ~US$ 24 Bn) in tractor and machinery, have decided to strengthen their partnership in pursuit of their vision of global leadership in Agri Machinery. As part of this, Kubota Corporation shall increase its equity stake in Escorts by subscribing to new equity shares proposed to be issued by Escorts and shall become a joint promoter along with existing promoter of Escorts. This transaction shall pave the way for Escorts and Kubota to seamlessly integrate their respective strengths to become a formidable global force in the farm equipment sector.

This partnership with Kubota will enable Escorts to have access to global best practices and state of the art research & development facilities which will complement Escort’s proven strengths in engineering and execution - to deliver high quality, cost-efficient solutions, in India and across the world.

Key Transaction Highlights

* Escorts will issue 9,363,726 equity shares through a preferential issue to Kubota at an issue price of INR 2,000 per equity share aggregating INR 1,872.74 crore, subject to shareholders’ and necessary regulatory approvals

* Post Preferential allotment, Kubota’s investment in Escorts will be 14.99%!

* Kubota will also make an Open Offer to the public shareholders of Escorts to acquire upto 26% of the share capital in accordance with SEBI Regulations

* Current promoter group (Nanda Family) are not selling any shares of the Company

* With a goal of making Escorts the exclusive vehicle of business in India and simplifying the corporate structure, Escorts and Kubota have decided to take necessary steps to evaluate and consider the feasibility of merger of Kubota’s Subsidiaries in India where Escorts is also a partner [i.e., Kubota Agricultural Machinery India Pvt. Ltd (KAI) & Escorts Kubota India Private Limited (EKI)] into Escorts, subject to necessary approvals.

* The Board of Directors of Escorts has agreed to evaluate and consider the feasibility of cancelation of all the residual equity stake of Escorts held by the Escorts Benefit and Welfare Trust (besides the pending capital reduction) without payment of any consideration and the merger of Escorts Finance Limited into Escorts, subject to necessary approvals.

* To reflect the spirit of joint partnership, upon completion of this transaction, the name of the company shall be changed to ‘Escorts Kubota Limited’ subject to regulatory approvals.

* Kubota intends to have Mr. Nikhil Nanda engaged in his individual capacity as a non-employee with the proposed designation of senior managing executive officer and General Manager of Value-Innovative Farm and Industrial Machinery Strategy and Operations of Kubota, besides a proposal to induct him as a director on the Board of Kubota’s European business holding company, Kubota Holdings Europe B.V., Netherlands. Mr. Nikhil Nanda's non-employee involvement in the foregoing capacity will not interfere with his role as the CMD of Escorts. There will be no remuneration payable to him for these services.

Open Offer- Escorts (ESC IN) |Open Offer Price : INR 2,000 | CMP 1,784 | Min Acceptance : 51% | Final Acceptance : 70-75%

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