JK Tyre Shares Surge Following Merger with Cavendish Industries

On September 17, shares of JK Tyre rose after the company's board approved the merger of Cavendish Industries into JK Tyre, aimed at improving operational efficiencies. As part of the merger, shareholders of Cavendish Industries will receive 92 JK Tyre shares for every 100 Cavendish shares they hold, according to the company's statement.

In the previous trading session, JK Tyre’s stock saw a slight decline, closing at ₹442.60 on the NSE. The stock has risen by 12% so far this year, lagging behind the Nifty index, which has delivered a 16% return in the same period. Over the past 12 months, JK Tyre's shares have surged by 73%, whereas Nifty has gained 26% during this time.

The merger is expected to generate operational synergies, reduce costs, strengthen the sales and distribution network, and enhance shareholder value, JK Tyre said in a regulatory filing. Both companies operate in the same industry, and the merger will bring all related businesses under one listed entity, the company added.

Post-merger, there will be a slight change in the shareholding structure, with the promoter's stake dropping marginally to 49.31%. JK Tyre & Industries had previously acquired Cavendish Industries, which was a part of Kesoram Industries, for ₹2,195 crore to bolster its presence in the truck and bus radial tyre segment.

Additionally, JK Tyre recently issued 1.33 crore equity shares with a face value of ₹2 each after converting 24,000 Compulsorily Convertible Debentures (CCDs), each with a face value of ₹1 lakh. These CCDs, which carried a 6% annual interest compounded quarterly, were converted at ₹180.50 per share through a preferential allotment to International Finance Corporation, a Qualified Institutional Buyer.

Following the CCD conversion, JK Tyre's total equity share capital has increased from 26.07 crore shares to 27.40 crore shares, each with a face value of ₹2, fully paid.

JK Tyre & Industries Limited is a major automotive tyre manufacturer in India, engaged in the production, development, marketing, and distribution of tyres, tubes, flaps, and retreads. The company supplies tyres to vehicle manufacturers as original equipment and also serves the replacement market. It operates manufacturing facilities in both India and Mexico, with a global distribution network.