Mitsubishi Pencils Acquires 13.5% In Linc Pens For R20Cr
Linc Pen & Plastics has announced that Mitsubishi Pencil Co Ltd is investing R20Cr in the company as a part of it's Business and Capital Alliance Agreement. This transaction will give Mitsubishi a 13.5% stake in the stationary products manufacturer.
Linc Pen & Plastics is issuing 2 million shares at a price of R100 each, which translates to a premium of 110% on it's closing price of R47.55 on March 27. This deal values Linc Pens at R148Cr i.e 13.2x trailing 12-months EBITDA and 49x its net profit.
According to a press release on BSE, the objective of the partnership is to improve Mitsubishi Pencil's presence and the Uni / Uniball brand growth in India by employing Linc Pen's sales, marketing and growth capabilities and Mitsubishi's product development and writing instrument technology prowess.
Linc Pen has a distribution agreement with Mitsubishi Pencil for it's Uni / Uni-ball brand since 1992. These brands contribute nearly 15% to Linc's domestic turnover and it is expected that this new relationship will substantially increase the contribution of the Mitsubishi brands to Linc's total sales revenue. Linc is also associated with Lamy and Bensia.
Linc Pen manufactures and markets stationery products, mainly writing pens, refills, and pencils. It has more than 50 products in its portfolio. The company's manufacturing units are located in Falta and Serakole (West Bengal), and Pilerne (Goa).
Linc competes with Camlin, Reynolds, Luxor and Cello Group in the Indian writing instruments space.
Last year, Japan based Kokuyo picked up a majority stake in Camlin for R360Cr, while BIC Group had acquired 40% stake in Cello Group for approximately R800Cr in 2009. BIC group valued the company at roughly R2000Cr or 5 times annual sales.
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