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Welspun Corp exits Leighton Welspun

Tuesday, 31 December 2013 - 12:11pm IST | Place: Mumbai | Agency: DNA

Welspun Corp, leading steel pipemaker, announced that its arm Welspun Infra Projects Private Ltd (WIPPL) will sell its entire 39.8% stake in Leighton Welspun Contractors India Private Ltd (LWIN) for $99 million, or Rs614 crore, for a minor profit of Rs29 crore.

Following the announcement, the company's stock rose 10% and closed at Rs64.40 a share on Monday.

After the stake sale, the infrastructure joint venture with will be renamed as Leighton India. B K Goenka-led Welspun Corp had acquired 35% stake in joint venture with Australian major for Rs470 crore to pursue public-private partnership opportunities in infrastructure sector and subsequently acquired additional shares in the entity in a cashless transaction worth Rs115 crore, the company said in a statement.

“Welspun Corp decided to exit the venture, to enable Welspun to redirect its efforts and reposition itself in the infrastructure space which has synergies with its other businesses. To streamline the structure, Welspun Infratech has also entered into an agreement with Welspun Infra Developers to acquire its 40% stake in WIPPL,” Welspun said in a statement to the stock exchanges.

Welspun Corp intends to use proceeds of stake sale for reducing debt and deleveraging the balance sheet.

The transaction is expected to be completed in the first quarter of 2014, after meeting procedural conditions.

Welspun Corp has been trying to focus on its core business of making pipes and plates for sometime now, and hence in May had announced demerger of  its other businesses such as energy infrastructure and steel into a separate entity called Welspun Enterprise Ltd.

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