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CG Power share price: Shares of CG Power and Industrial Solutions gained as much as 2.78 per cent to hit an intraday high of Rs 738.80 per share.
CG Power’s stock price increased after the company announced that it had entered into a definitive agreement, namely an asset purchase agreement with Renesas Electronics America Inc. and other affiliated entities of Renesas Electronics Corporation (Renesas) to acquire radio frequency (RF) components business in an all-cash transaction.
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In an exchange filing, CG Power said: “We wish to inform that CG Power and Industrial Solutions Limited (“the Company”) yesterday (i.e. October 4, 2024) entered into a definitive agreement, c ‘that is, an asset purchase agreement with Renesas Electronics. America Inc. and other affiliated entities of Renesas Electronics Corporation (“Renesas”) to acquire the Radio Frequency (“RF”) Components business, through one or more subsidiaries to be incorporated by the Company .
The proposed acquisition of the RF Components business is for consideration of approximately $36 million, subject to customary adjustments and applicable taxes, CG Power said in a statement.
That said, the RF Components business includes equipment, intellectual property, inventory, customers, certain transferred employees, contracts and other licenses. The RF components business generated annual revenue of approximately $56 million in calendar year 2023, the company said in a statement.
Vellayan Subbiah, Chairman, CG Power and Industrial Solutions Limited, said, “A significant number of semiconductor designers in the world are Indian. Through this acquisition, we aim to strengthen India’s presence in the semiconductor design and development space, which is considered a high-growth sector. and high profitability.”
Through this transaction, CG Power said it will acquire intellectual property (IP), tangible assets and select transferred employees in various functions such as semiconductor design, marketing, applications, etc. related to the activity of RF components.
Davin Lee, Senior Vice President and General Manager of the Analog and Connectivity Group at Renesas, said: “This agreement with CG will provide the opportunity for our RF team to grow. We are delighted that CG is providing exceptional RF technology and world-class support to our customers, and we will support a smooth transition to facilitate the same. For Renesas, this move allows us to focus more on the strategic segment of our analog and connectivity businesses, allowing us to further expand to better meet customer demand.
CG Power and Industrial Solutions Limited, headquartered in Mumbai, is a key player in the electrical engineering sector, known for its diversified offerings in industrial systems and power systems. The company manufactures critical components for Indian Railways, including traction motors and propulsion systems, as well as a variety of products such as induction motors, drives, transformers and switchgear for industrial and electrical applications.
Recently, CG Power has expanded its portfolio to include consumer appliances such as fans, pumps and water heaters, thereby diversifying its market reach. With world-class manufacturing facilities spread across nine locations in India and one in Sweden, the company supports its operations through a comprehensive network of regional offices and branches.
In FY24, CG Power reported consolidated revenue of Rs 8,046 crore (approximately $964 million), highlighting its strong market presence and commitment to innovation and sustainability. The company joined the Murugappa Group in November 2020, strengthening its position.
At 1:40 p.m., shares of CG Power were trading 2.25 per cent higher at Rs 735 per share. In comparison, BSE Sensex was trading 0.94 percent lower at 80,917.09 levels.
First publication: October 7, 2024 | 1:49 p.m. STI