Varroc Engineering is most certainly having a bad day. The stock price tanked almost 9% to hit an intraday low at Rs.308.55 and volumes were up 4x.
The market has given the stock a complete run down today as it has sold its 4-wheeler lighting business at a reduced price than what was conveyed earlier.
The company along with its Netherland-based subsidiary signed an amended settlement agreement with French company, Vale Vision. As per the amendment, the transaction price has come down from earlier Euro 600 million to Euro 520 million.
The company said that the price has come considering the current recessionary trends in Europe. It added that Out of Court settlement for patents infringement disputes reached for Euro 51 million just for concluding the deal.
In the earlier deal, Net Cash Accretion to Varroc, post-tax and net of escrow, was estimated to be between Euro 160-175M subject to closing adjustments and escrow of 35M was to be released over 2-3 years. This has now changed - Net Cash Accretion at around Euro 5-9 million ; escrow revised downwards to Euro 28 million.
The deal was completed on 6th October 2022 and debt & debt like adjustments of approx. Euro 400 million settled.
This is climb down did not go well with the marketmen because as such a reduced price is not welcome and more importantly, the price has been reduced for a unit that contributed 54% to the total revenue of the company.