APL Apollo Tubes Limited (BSE:533758) entered a draft scheme of amalgamation to acquire a 44.18% stake in Apollo TriCoat Tubes Limited (BSE:538566) for INR 14.4 billion on February 27, 2021. The consideration comprises of Apollo TriCoat shareholders receiving one share of APL Apollo Tubes for each share of Apollo TriCoat held. In the combined company, existing APL Apollo Tubes shareholders will have an 89.2% shareholding and Apollo TriCoat will have a 10.8% shareholding. In relation to this transaction, Shri Lakshmi Metal Udyog which holds a 55.82% stake in Apollo Tricoat, will undergo a share split. The transaction is a part of an amalgamation of Shri Lakshmi Metal Udyog Limited, a wholly owned subsidiary of APL Apollo Tubes, and Apollo TriCoat, wherein both will be simultaneously merged into APL Apollo Tubes and will operate as a combined business under “APL Apollo”.

The Scheme is subject to receipt of approvals from the shareholders of Apollo TriCoat, shareholders of the APL Apollo Tubes as may be directed by the National Company Law Tribunal, BSE Limited, National Stock Exchange of India Limited and approval of other regulatory or statutory authorities as may be required. The transaction is subject to approval from creditors of APL Apollo Tubes. The Board of APL Apollo Tubes has approved the transaction based on reports furnished by the Audit Committee and the Independent Directors. As of October 15, 2022, National Company Law tribunal has approved the transaction. The transaction is expected to close in the third quarter of financial year 2022 with the appointed date of merger being April 1, 2021. The transaction is EPS accretive with net profit increase by 13.5%, dilution of 9.7% and ROE accretive with 100% of Apollo TriCoat's profit to boost return profile and margin accretive with Apollo TriCoat's high margin products to lift APL Apollo Tubes's profitability. The amalgamation is a tax neutral transaction.

Fortress Capital Management Services Private Limited acted as fairness opinion provider to APL Apollo. KPMG Assurance and Consulting Services LLP acted as accountant to APL Apollo. SSPA & Co. Chartered Accountants acted as an independent valuer.

APL Apollo Tubes Limited (BSE:533758) completed the acquisition of 44.18% stake in Apollo TriCoat Tubes Limited (BSE:538566) on October 31, 2022.