Reuters, Bangalore, November 18-Japan's Kubota Corporation (6326.T) said on Thursday that it will increase its stake in tractor manufacturer Escorts Ltd (ESCO.NS) to 44.8%, and the Indian company's stock will rise to a record high .
The Japanese tractor and other agricultural machinery manufacturer said that Kubota, which currently holds a 9.09% stake in Escorts, will increase its stake by subscribing to third-party priority shares.
Escorts approved the issuance of 9.4 million shares to Kubota at a price of 2,000 rupees per share, raising up to 18.73 billion rupees (US$255.66 million) at a 23% premium to Wednesday's closing price.
After the announcement, the share price of Escorts soared to a record high of Rs 1,824.95.
Osaka-based Kubota expects to increase its stake in Escorts to 53.5% and become a co-sponsor.
Escorts said that its chairman and managing director Nikhil Nanda may get a potential board seat at Kubota's European Commercial Holding Company.
Escorts said it is also evaluating potential mergers of Kubota's India division, Escorts' finance division, and Kubota's joint venture with the parent company, adding that it is considering a name change to reflect Kubota's corporate image.
As of September 30, India's most famous billionaire investor Rakesh Jhunjhunwala also owns 4.85% of Escorts.
It added in a statement that the Haryana-based agricultural machinery manufacturer aims to establish one of the largest India-Japan agricultural cooperation in the field of agricultural equipment with Kubota.
Escorts added that its current sponsor group, the Nanda family, will not sell any shares and will continue to invest fully in the company.
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