Jain Irrigation to acquire 80% stake in two US entities, stock rallies 9%

The stock surged 9% to Rs 108.80 on BSE, trading close to its 52-week high of Rs 109.25.

Jain Irrigation Systems surged 9% to Rs 108.80 on BSE after the company announced the investment in United States’ (US) largest micro irrigation dealers – Agri-Vally Irrigation (AVI) & Irrigation Design and Construction, Inc. (IDC).

“The company through its multi generation wholly owned subsidiary in US agreed to acquire 80% stake in two US entities. The company has entered into an agreement to merge ownership of their businesses into a newly formed distribution company,” Jain Irrigation Systems said in a press release.

The new organisation is an unparalleled leader in design, construction, service and innovation Ag Technology. This entity will provide a unique platform to help growers implement state of the art irrigation technology and achieve 'More Crop Per Drop'.

The company said the consideration for transaction will be paid in cash not exceeding $ 48.50 million and subject to net working capital adjustments at the time of closing. Transaction is expected to be closed in the next few weeks.

The merger will help the company to forward integrate itself in the value chain and build direct relationship with growers, it added.

At 12:25 pm; the stock was up 8% to Rs 108, trading close to its 52-week high of Rs 109.25 hit on October 30, 2016 in intra-day trade. The trading volumes on the counter jumped more than three-fold with a combined 13.9 million shares changed hands on BSE and NSE so far.