This S&P BSE Smallcap stock hit 20% upper circuit on Tuesday within the first hour of trading. The stock saw strong spurt in volumes that was 21x yesterday’s volume and 11x the monthly average. The company announced a major acquisition of a foreign company to expand its geographic presence.
Gokaldas Exports Ltd (“Gokaldas”) is the largest garments exporter in India and has partnered with huge name brands such as Nike, Puma, Old Navy, Levi’s, Macy’s and many more. The company is currently present in over 50 countries, having been founded in 1979 in Bangalore, India. Gokaldas’ stock has returned over 101% YTD and 1,177% over a 3 year period.
Gokaldas, entered into a definitive agreement to acquire full stake of Atraco Group, as per its BSE filing dated 28th August 2023. Atraco is a leading apparel manufacturer with a strong footprint across the EU and US. Atraco primarily makes shorts, pants, shirts, tees, dresses that cater to all age groups.
Atraco is based in Dubai, UAE but also has locations in Kenya and Ethiopia. Atraco’s key differentiators are stated to be: Relentless focus on cost and efficiency, Emphasis on profitability and scale, Strong sales and marketing expertise, Access to low-cost duty-free manufacturing locations, Long-standing relationships with customers
Atraco’s revenue is reportedly USD 107 million with net profit of USD 7.2 million for the PY. The transaction will add 13k workers to Gokaldas’ workforce and is valued at USD 55 million.
The deal is to be financed through debt and internal accruals and is structured as a mix of stock and asset sale. USD 45 million of the acquisition is expected to be completed by Q3 FY2024 and rest by Q4 FY2024. Gokaldas’ advisor on the deal is JM Financial Ltd and Khaitan & Co is its legal advisor and partner on due diligence.
“We are very excited to welcome Atraco’s admirable leadership team, their employees and their global customers to GEL. We have always believed in continuously adding production capacity at strategic locations enhancing our value proposition to customers. The acquisition of Atraco is an important step in this direction as it is strategically relevant, possesses a good complementary customer base, operationally strong, and above all, a leader in its own sphere. With this acquisition, we will gain access to low-cost duty free locations for manufacturing. Together, we can deliver a wider choice and value proposition to our global customers. We look forward to welcoming over 13,000 new members into the GEL family.”, said Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director of Gokaldas.
Written by Sandeep R
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