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      CG Power advances after accepting binding offer

      MoM Team / Mumbai, Jun 21, 2017 10:53 AM IST

        CG Power advances after accepting binding offer

        CG Power and Industrial Solutions gained 2.3 percent to Rs 86.75 on BSE after the company announced that it accepted a binding offer of WEG S.A. for acquisition of the company's power business in USA.

        The announcement was made during market hours today, 21 June 2017.

        Meanwhile, the S&P BSE Sensex was down 80.13 points, or 0.26 percent, to 31,217.40. The S&P BSE Mid-Cap index was up 7.83 points, or 0.05 percent, to 14,853.12.

        On the BSE, 1.08 lakh shares were traded in the counter so far, compared with average daily volumes of 5.15 lakh shares in the past one quarter. The stock had hit a high of Rs 87.10 and a low of Rs 84 so far during the day.

        The stock had hit a 52-week high of Rs 97.30 on 26 May 2017. The stock had hit a 52-week low of Rs 55.60 on 26 December 2016.

        The stock had underperformed the market over the past one month till 20 June 2017, falling 7.47 percent compared with 2.73 percent rise in the Sensex. The scrip had, however, outperformed the market in past one quarter, gaining 15.22 percent as against Sensex's 6.03 percent gains. The scrip had, however, underperformed the market in past one year, gaining 14.67 percent as against Sensex's 16.49 percent gains.

        The mid-cap company has equity capital of Rs 125.35 crore. Face value per share is Rs 2.

        CG Power & Industrial Solutions has accepted a binding offer of WEG S.A. for acquisition of the company's power business in USA comprised in the company's step down overseas subsidiary, CG Power USA Inc. (PSUS), at an enterprise value of $37 million.

        In this regard, CG Power Systems Belgium N.V., the company's step down overseas subsidiary has executed a stock purchase agreement on 20 June 2017 with WEG Electric Corp for sale of its 100 percent stake in PSUS, comprising exclusively of the company's power business at closing.

        The SPA is expected to close by 31 July 2017 upon which CG Power USA Inc. will cease to be an overseas subsidiary of the Company.

        The deal is part of the company's stated strategy of debt reduction and on focusing on its core operations and core market in India.

        WEG SA is a Brazilian company and a global player in electro-electronic products.

        On 26 May 2017, the company had said that it received an offer for acquisition of the company's power business in United States of America, comprised in its subsidiary, PSUS. The board decided to divest the power business of PSUS.


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      Source: Capital Market


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