Major agricultural machinery maker Kubota Corp. will obtain a majority stake in Indian peer Escorts Ltd. as a step toward becoming a main player in the country's tractor market.
Kubota said it has agreed with Escorts to boost its ownership up to 53.50 percent with a fresh investment of up to 93.7 billion rupees ($1.26 billion), from the 9.09 percent stake the Osaka-based company acquired last year for about 16 billion yen.
The additional shares of Escorts, based in Faridabad in the northern state of Haryana, are scheduled to be acquired through a third-party allotment and open offer bids by March 2022, Kubota said.
The move may put Kubota in a good position to realize its ambitious goal of grabbing a 24 percent share of the Indian tractor market, billed as the largest in the world, by 2030 to go with sales worth 300 billion yen in that year.
Currently, market leader Mahindra and Mahindra accounts for about 40 percent with sales of 865,000 tractors a year, while Escorts is ranked fourth with 12 percent and Kubota is in the lower rungs at 2 percent, according to Kubota.
Kubota intends to follow the purchase of a controlling interest in Escorts with a plan to absorb both of its India-based units -- Kubota Agricultural Machinery India Private Ltd. and Escorts Kubota India Private Ltd., a joint venture with Escorts -- to streamline its local manufacturing and sales operations. (NNA/Kyodo)