Welspun wraps up UK's Christy

Acquisition to come at Rs 132.6 crore enterprise value.

Welspun India today announced the acquisition of 85 per cent stake in CHT Holdings, the promoters of UK's leading towel brand Christy, for an enterprise value of Rs 132.6 crore.

The acquisition is in line with the company's strategy of emerging as one of the largest global home textiles company by 2008.

B K Goenka, vice-chairman and managing director of Welspun India, said the company had paid Rs 100 crore towards the acquisition. The company mobilised Rs 40 crore from internal resources and took a loan of Rs 60 crore from Bank of India. Standard Chartered Bank advised Welspun on the deal.

Following the announcement of the acquisition, the share price of Welspun closed at Rs 87.70 on the BSE, 12.51 per cent higher over its previous Rs 77.95.

The balance 15 per cent stake will continue to be with CHT management. Welspun will acquire the stake after three years. Both the parties shall be able to exercise a putcall option after April 1, 2009.

Rajesh Mandawewala, joint MD of Welspun has been appointed as chairman of Christy. Founded in 1851, Christy is the world's oldest towel maker and enjoys 75 per cent share of the UK market with an annual turnover of pound 35 million (nearly Rs 284 crore).

It invented the first loom to mechanically weave and the sole supplier to Wimbledon Championship tennis towel. It supplies to retailers such as Mark and Spencer's and John Lewis in UK.

Goenka, said, "We want to benefit from Christy's product technology. Christy also complements our recent initiatives to develop a more robust model providing global consumers including the UK and US with contemporary products for the home."

The acquisition is expected to give Welspun an access to UK and European markets and extend the Christy brand to domestic consumers through Welspun retail.

Welspun is expected to cross the $ 1 billion mark at the end of the current financial year. Welspun said it would realign its US distribution network with Christy's own network. Joel Rosenblatt, CEO of Christy, said the company expected to post a turnover of nearly Rs 338 crore next year. Welspun is the largest terry towel producer in Asia and fourth largest in the world.