BENGALURU | TUESDAY, 5 JUNE 2018 COMPANIES 3. <

RAJESH BHAYANI & AGENCIES

Mumbai, 4 June

Bayer plans to completethe acquisition ofMonsanto on June 7,

following the receipt of allrequired approvals, in Indiaand abroad, from regulatoryauthorities for the $63-billioncombination of the twomultinational companies.

Globally, Bayer willremain the company name;all acquired products willretain their brand names andbecome part of the Bayerportfolio.

In this country, BayerCropScience Ltd andMonsanto India Ltd are bothlisted on the stockexchanges. Bayer stated:“Both companies will con-tinue to operate independ-ently. The relevant bodies ofboth entities will review thebest possible option on theintegration.”

However, in a board meet-ing last Tuesday, BayerCropScience decided toinvest upto ~4 bn to acquirethe shares of Monsantothrough an open offer.

Of late, Monsanto, theworld’s largest maker of

genetically modified (GM)seed, has been facing prob-lems with some govern-ments and with environ-mentalists.

In India, it has decided tonot introduce any new tech-nologies in the GM segmentor new varieties of cotton tillissues with the governmentare resolved.

All these have impactedthe Monsanto brand value.

Including Monsanto andtaking divestitures intoaccount, the total researchand development investmentof Bayer in 2017 would havebeen around �5.7 billion.

Of that, �2.4 bn wouldhave been spent in thecombined agricultural busi-ness.

Bayer had announced itsintention to acquireMonsanto in May 2016 andsigned an agreement with theUS company for $128 pershare in September 2016.Currently that correspondsto a total cost of about $63billion taking into accountMonsanto's debt outstandingas of February 28, 2018.

“Bayer will become thesole shareholder of Monsantoon June 7,” said Werner

Baumann, Chairman of theboard of management ofBayer AG in a statement.

According to the condi-tional approval from theUnited States Department ofJustice, the integration ofMonsanto into Bayer can takeplace as soon as the divest-ments to BASF have beencompleted. This is expectedto be in approximately twomonths, he said.

“We have diligently pre-pared for the upcoming inte-gration over the past twoyears. Our extensive experi-ence in integrating otherlarge companies has proventhat we can and will be suc-cessful,” Baumann said.

“The acquisition ofMonsanto is a strategic mile-stone in strengthening ourportfolio of leading busi-nesses in health and nutri-tion. We will double the sizeof our agriculture businessand create a leading innova-tion engine in agriculture...,”Baumann added.

Stating that the acquisi-tion is anticipated to gener-ate significant value, Bayersaid it expects a positive con-tribution to core earnings pershare starting in 2019.

Bayer to dropMonsanto nameWill make open offer to acquire shares in India

MERGER EFFECT

RAGHAVENDRA KAMATH

Mumbai, 4 June

Prestige Estates plans to become a pan-India office property developer, to takeadvantage of the booming segment andits large client base.

The Bengaluru-based developer islooking to enter several cities, such asthose in the National Capital Region(NCR), Mumbai and Pune, among oth-ers, says Irfan Razack, chairman andmanaging director.

Recently, Singapore-based sover-eign fund GIC signed a term sheet withPrestige to buy a stake in the subsidiaryof the latter which owns assets of eightmillion sq ft. Prestige is also set to startan 800,000 sq ft information technol-ogy (IT) park in Pune and had startedwork on another IT park in Kerala. Its350,000-sq ft project in GIFT City,Gujarat, is ready.

The company is close to signing adeal to develop a property in Gurugram

and has signed an agreement at Airoli inNavi Mumbai.

“We have clients willing to take spacesin whichever cities we enter and set upoffices,” Razack said.

Prestige has 8.57 mn sq ft of opera-tional office properties, 4.13 mn sq ft ofongoing projects and nine mn sq ft ear-marked to start work on. Prestige andits partners expect to have rental

income of ~10 billion in FY19, of whichPrestige has ~8.25 billion.

“Rents have gone up 30 per cent forGrade-A properties,” Razack said,adding they have separate sectoralreporting for the office, retail, hospital-ity and scale-up investments in differ-ent verticals.

Ashok Kumar, managing director,Gennext Partners, said Prestige had

changed its strategy of selling smalleroffices to holding these.

“I do not know how much they willsucceed in north India but in the West,they should do well,” he said.

At 11.4 million sq ft, the first quarter of2018 saw a 23 per cent increase over ayear in gross office take-up in the coun-try. Representing 34 per cent of total leas-ing volume, Bengaluru continued toaccount for the highest share of absorp-tion, followed by the NCR with 26 percent, Pune with 16 per cent, Mumbaiwith 10 per cent, Chennai with nine percent, Hyderabad with four per cent andKolkata with one per cent.

Prestige is also looking at buildingsix malls. Currently, it has seven oper-ating malls.

Early this year, it had bought outinvestor CapitaLand’s stakes in its mallsand residential projects for ~3.4 billion.This would boost its annuity portfolioby an estimated ~750 million a year inrental income, it said.

Production ofSuzuki crosses200 mn in India

PRESS TRUST OF INDIA

New Delhi, 4 June

Japan's Suzuki Motor Corporation(SMC) on Monday said it hadachieved accumulated automobileproduction of 20 million units inIndia.

With this, India becomes the sec-ond country after Japan where Suzukihas reached this milestone, the com-pany said.

SMC, which began its journey inIndia through a joint venture withthe Central government, MarutiUdyog said the country was thefastest to reach 20 million units in 34years and five months since produc-tion started in December 1983, break-ing the record of 45 years and ninemonths in Japan.

Currently, SMC produces auto-mobiles in the country throughMaruti Suzuki India (MSIL) inwhich it holds 56.21 per cent stakeand fully-owned arm, Suzuki MotorGujarat (SMG), that supplies exclu-sively to MSIL.

While MSIL produces vehicles atGurugram and Manesar plants, SMG

rolls out vehicles from its Gujarat facil-ity.

"Of the 20 million units, Alto wasthe most-produced model withapproximately 3.17 million units,"SMC said, adding the companycrossed this milestone in India withthe newly launched Swift produced atthe Gujarat plant.

The Japanese small car majorbegan its automobile production inIndia in December 1983 with its firstmodel, the Maruti 800 by erstwhileMaruti Udyog.

Currently, 16 models, includingthe Dzire, Baleno, Alto, Swift,WagonR, and Vitara Brezza, are pro-duced at the three plants.

In 2017-18, around 1.78 millionunits were produced in India, ofwhich 1.65 million units were sold inthe domestic market and 1,30,000units were exported to over 100 coun-tries and regions including Europe,Japan, Asia, Africa, and LatinAmerica, SMC added.

The company had crossed the first1 million units milestone in March1994 and went on to reach 10 millionunits in March 2011.

Eye on acquisitions, Prestige to go pan-India Bengaluru-based firm plans to foray into National Capital Region, Mumbai, Pune

Globally, Bayer will remain the company name; all acquired products will retain their brandnames and become part of the Bayer portfolio

WE HAVE CLIENTSWILLING TO TAKE SPACES INWHICHEVER CITIES WE ENTERAND SET UP OFFICES”

“RENTSHAVEGONEUP 30 PERCENT FOR GRADE-APROPERTIES”

IRFAN RAZACKChairman and managing director,Prestige Estates

T E NARASIMHAN

Chennai, 4 June

Apis Partners, private equity (PE) fundfocused on technology-enabled finan-cial services, will launch a $400-millionfunding round, which will invest in firmswith a social impact through productsand services that enable financial inclu-sions in many countries, including India.

International Finance Corporation(IFC), a member of the World BankGroup, had proposed a $25-million equi-ty investment in Apis Partners, notexceeding 20 per cent of the total com-mitted capital.

IFC will also play a catalytic role as adirect foreign investor through its stampof approval to help the PE firm to achievea first close and critical mass (the point at

which a growing firm becomes self-sus-taining, and no longer needs additionalinvestment to be economically-viable),and will provide additional financing toinvestee companies through debt andequity co-investments. The fund will pri-marily focus on India, Cote d'Ivoire,Kenya, Morocco, Nigeria, South Africa,Indonesia, Pakistan and the Philippines.

Its investment objective is to makemid-market growth equity investmentsinto financial services and technologysuch as payments, credit and savings,insurance, technology service providersand capital markets located in Africaand Asia. The fund will focus on fund-ing growth-stage companies thatrequire growth equity to expand theirgeographies, product ranges or to fundvertical integration.

Apis Partners to launch $400-mn ‘social’ fund

ANDREW NOËL & TARA PATEL

4 June

Europe’s biggest hotel opera-tor is considering acquiring aminority stake in Air France-KLM, becoming the anchorinvestor in the French airlineas it struggles to contain a bitterand costly labor dispute.

The prospect of Accor SA,operator of the Raffles,Sofitel, Mercure and Ibisbrands, swooping in to buythe French government’s 14.3per cent stake sent shares inAir France-KLM surging asmuch as 7.4 per cent onMonday. Accor stockslumped, with analysts atSanford C Bernstein & Co say-ing the deal may be risky forthe hotel owner based in Issy-les-Moulineaux, France.

“Air France-KLM current-ly has no CEO, no evidentstrategy to solve its labor cri-sis, and is highly exposed torising fuel prices,” analystsincluding RichardClarke said in anote. “While thestrategic rationalefor Accor is there,we wonder whythis cannot beachieved by acommercial part-nership.”

A tie-up withAccor would giveAir France a com-mercial partner asits biggest owner, after LesEchos reported that the hoteloperator is considering buy-ing the French state’s hold-ing. A sale of the stake wouldlessen the threat of politicalmeddling in the airline’soperations, while potentiallyinflaming tensions amid aprotracted labor dispute.Fifteen days of walkouts thatbegan on February 22 bypilots, cabin crew and groundstaff triggered the resignation

of former chief executiveJean-Marc Janaillac and costmore than ^400 mil-lion($467.8 million).

For AccorHotels, an airlinepartner would help fill roomsacross its more than 4,000hotels in 100 countries.Buying a stake now would fol-low a 45 percent drop in Air

France sharesthis year, theworst perform-ance in the Stoxx600 Travel &Leisure index.Few hotel chainshave venturedinto airline own-ership in the past,though airlineshave taken stakesin hospitalitycompanies. SAS

AB once had a stake in theRadisson brand, for example,and tour operators such asThomas Cook Group Plc andTUI AG own many of theirown hotels.

AccorHotels said in astatement late Sunday that apotential acquisition of aminority holding in the air-line would “strengthen theindustrial growth project.”The company said the firmshave in past years discussed

joint efforts spanning loyaltyprograms and a shared serv-ices platform. The latestmove is at a “very early stage”and will be discussed with thecarrier “in due time,” it said.

The statement confirmeda report in the Les Echosnewspaper. Should a deal bereached, Accor CEOSebastien Bazin wouldbecome non-executive chair-man of the carrier, Le Figaroreported.

The labor conflict at AirFrance-KLM has reached intothe upper echelons of theFrench government, withministers warning the dis-pute threatened the airline’sfuture.

While the interim man-agement team led by financechief Frederic Gagey has lefttalks with unions in limbo,the underlying dispute overpay hasn’t been resolved. AirFrance-KLM was trading 7.4per cent higher at 7.50 eurosat 12:27 pm in Paris, puttingthe value of the government’s14.3 per cent at about ^460million.

Accor shares tumbled 6.4per cent, the most since June2016, to ̂ 44.53, giving a mar-ket value of ^12.9 billion.

BLOOMBERG

Accor mulls buyingstake in strike-riddenAir France-KLM

Accor stock slumped, with analysts at Sanford C Bernstein &Co saying the deal may be risky for the hotel owner based inIssy-les-Moulineaux, France

Alto was the most-produced model, accounting for around 3.17 million of thethe 20 million units produced

A tie-up withAccor would giveAir France acommercialpartner as itsbiggest owner,after Les Echosreported that thehotel operator isconsideringbuying the Frenchstate’s holding