Shares of Prince Pipes and Fittings rallied over 7% in intraday trade on Thursday after the company signed a deal with bathroom fitting company Klaus Waren Fixtures and Narshi Mulji Shah for the acquisition of its bathware brand ‘Aquel’ and plant located at Bhuj, Gujarat. The total cost of acquisition is ₹55 crore, which will be funded through internal accruals.
As per the agreement, the Mumbai-based pipe manufacturer will acquire ‘Aquel’ (along with all the relevant intellectual property) as well as moulds and dies will be acquired on an immediate basis. The other assets such as land parcels, buildings, machinery and manufacturing equipment, office furniture and fixtures situated at Klaus Waren’s plant in Bhuj, Gujarat, will be acquired in the second tranche.
The total built-up area is around 1,10,000 sq ft whereas the land parcel area spans 8 acres, which could be used for future expansion, Prince Pipes said in a BSE filing on March 20.
The first tranche of the acquisition of the relevant assets will be completed within 10 days from execution of the deal, while the second tranche of the acquisition of the assets is to be completed by October 15, 2024, subject to requisite approval from governmental authorities.
“The acquisition of the 'Aquel' brand along with other assets will help the company in setting up an in-house manufacturing facility inter alia resulting in building greater value in the bathware segment. This growth opportunity is aligned with the strategic directions of the company,” Prince Pipes said in an exchange filing on March 20,” Prince Pipes says in a BSE filing.
“Through this transaction, Prince would be able to increase its participation and contribution to the high-growth real estate market by being present across the plumbing and bathing segments. With the acquisition of the Aquel brand, Prince aims to become a prominent player in the bathware segment, replicating the success it has achieved in its other segments,” it says.
The company intends to unlock greater value in the bathware segment by leveraging the Aquel brand by creating distribution channels across major markets in India for faster expansion and to carve out a solid brand identity.
Nihar Chheda, VP Strategy, Prince Pipes, said, “We are excited to have the acclaimed Aquel brand as a part of Bathware portfolio and our products henceforth will be branded and retailed under the brand- ‘Aquel by Prince’. The transaction is a strategic and financial fit that will bring significant synergies and market opportunities across our segments. It will catapult the performance of the bathware segment giving us direct access to an iconic brand along with a state-of-the-art facility and creating a larger distribution channel in major markets across India.”
The release highlights that Aquel enjoys high brand equity with key stakeholders like architects, builders and interior designers and homeowners. It has established itself as a key player in Western, Central and certain parts of South India, with its wide range of products.
Citing market estimates, the company said that the overall market size of the bathware segment is expected to be ₹18,000 crore with the organised market at 65% and the unorganised market at 35%. In the bathware segment, the market for faucets is estimated to be in the range of ₹11,000-12,000 crore and the market for sanitary products is in the range of ₹7,000–8,000 crore. With this transaction, the overall addressable market for Prince would be over ₹60,000 crore, it added.
Cheering the news, shares of Prince Pipes, one of India’s largest integrated piping solutions providers and multi-polymer manufacturers, gained 7.2% to hit an intraday high of ₹568.35 on the BSE, while the market capitalisation rose at ₹6,029 crore.
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