Kubota Corporation Limited will raise its equity stake in Escorts to 14.99% through a preferential issue of Rs 1,872 crore. The joint entity intends to attain global leadership in the farm equipment business.

Kubota Corporation will subscribe to a new equity share proposed to be issued by Escorts and become a joint promoter along with the Nanda family, which is the existing promoter of the company.

According to a report, Escorts stated that the Nanda family would not sell any of its shares in the deal. The transaction is subjected to shareholder and regulatory approvals.

The company's name will be changed to Escorts Kubota Limited. It will make an open offer to the shareholders of Escorts to acquire 26% stakes of the company. The open offer will be of the same price as the preferential issuance of Rs 2,000 per share. Kubota Corporation's stake in Escorts will increase to 44.80% after the open offer.

According to a statement, to make Escorts the exclusive vehicle of business in the country and simplify the corporate structure, Escorts and Kubota have planned to take necessary steps to evaluate and consider the feasibility of the merger of Kubota's subsidiaries in India into Escorts, subject to necessary approvals.

It will make Escorts housing a major R&D and Innovation Centre besides exclusive vehicle manufacturers in India.

Escorts have considered the feasibility of cancellation of all residential equity stakes of Escorts held by Escorts benefit and Welfare Trust without the payment of any consideration and merger of Escorts Finance into Escorts.

Chairman and Managing Director of Escorts, Nikhil Nanda, will be a non-employee of the senior managing executive officer and general manager of innovative farmer and industrial machine strategy. It was also proposed to appoint him as the Director of the Board of Kubota's European business.

It said that Nikhil's involvement as a non-employee in the foreign capacity would not hinder his role of Chairman and Managing Director of Escorts, and there will be no remuneration payable to him for his services.

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