JK Tyre & Industries, a leading four-wheeler tyre manufacturer in India and JK Asia Pacific Singapore, a wholly owned subsidiary of JK Tyre, have signed a binding term sheet with Kesoram Industries (KIL) to acquire 100% equity in Cavendish Industries (CIL) for Rs 22 billion.

CIL houses a tyre business undertaking in Haridwar that manufactures a range of tyres, tubes and flaps.

The company said, 'JK Group has agreed for this acquisition at an enterprise value not exceeding Rs 22 billion, subject to conditions, wherein JK Tyre will hold the largest shareholding block and shall have substantial management control of CIL with an option to place up to 55% with its associates, group companies.'

The acquisition is proposed to be funded, by combination of debt and internal accruals raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs 4.5 billion.

The acquisition will provide JK Tyre with further impetus towards ready expansion in the Truck & Bus Radials segment where it is a market leader as well as entry into the fast growing 2 and 3 Wheeler tyre market.

The final transaction is expected to consummate over next few months, subject to various approvals, with definitive documentation expected to be executed between the parties in due course of time.

Shares of the company declined Rs 1.45, or 1.34%, to trade at Rs 107.00. The total volume of shares traded was 1,097,756 at the BSE (11.14 a.m., Monday).