MUMBAI: Welspun India Ltd. (WIL) has announced that it has acquired an 85 per cent stake in CHT Holdings Ltd., the holding company of U.K.'s leading towel brand, Christy, for a consideration of Rs. 125 crore. The enterprise value is pegged at Rs 132 crore.

The existing Christy management team will continue to own the remaining 15 per cent of the issued share capital and will operate Christy on a stand-alone basis with the exception of Rajesh Mandawewala (Joint Managing Director, Welspun), who has been appointed Chairman of Christy on the Welspun board.

Following this acquisition, Christy is now a subsidiary of Welspun and all current employees will continue with the same terms and conditions of employment. The deal was part funded by Bank of India with Rs. 40 crore debt, while Rs. 60 crore was raised from internal accruals.

From April 1, 2009, Welspun and the Christy management will be able to exercise a put/call option, calculated by a formula based on 2007-08 and 2008-09 earnings before interest, depreciation, taxation and amortisation (EBIDTA) to buy or sell the 15 per cent equity interest retained by the existing Christy management.

Christy is the sole supplier of the world famous Wimbledon Championship tennis towel. In addition to manufacturing Christy branded product, it makes and imports a wide range of own label products for leading retailers.

In the U.K., it has established long-standing relationships with premium retail stores including, Marks & Spencer, John Lewis, House of Fraser, Selfridges and Debenhams.

Welspun is the largest terry towel producer in Asia and the fourth largest globally.

Addressing the media here on Monday, B. K. Goenka, Vice Chairman and Managing Director, Welspun Group, said, "We can leverage their presence in the U.K., U.S. and EU markets and we will be launching soon Christy through Welspun retail and it will be available at our more than 50 branded outlets, Spaces.''

Further, Mr. Goenka said, "We already deal with 17 of the top 20 retailers globally and will look to acquire brands in future."

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