Sri Lanka’s Renuka Foods to acquire Shaw Wallace Ceylon through a share swap


Oct 02, 2015 (LBO) – Sri Lanka’s Renuka Foods is to acquire Shaw Wallace Ceylon limited through a share swap agreement to save cost and improve operational efficiencies, the company said in a stock exchange filing.

A share swap is a tactic use during an acquisition of a company, paying shares rather than with cash.

Accordingly, Renuka Foods will acquire Shaw Wallace through the ordinary shares held by CJ Patel & Company (20.36%) and Eagle View Management (18.41%).

Renuka Foods will issue one ordinary voting share for every four ordinary voting shares of Shaw Wallace and will list the shares, subject to the necessary approvals.

Renuka Foods is to issue 28,188,306 shares at 30.45 rupees per share.

The issue price is at an 8.75 percent premium over current market price and is based on the Net Asset Value of the Company as at 30th June 2015, the company said.

Shaw Wallace Ceylon was also valued at its Net Asset Value for the purpose of this transaction.

Subsequent to the Share-Swap, Renuka Foods will own 98.94 percent of the voting shares of Shaw Wallace Ceylon directly and indirectly.

The acquisition of shares is expected to accommodate the Company’s consolidation drive as well as strengthen its net assets attributable to equity holders, the company said.