Key Transaction Highlights

• Escorts will issue 9,363,726 equity shares through a preferential issue to Kubota at an issue price of INR 2,000 per equity share aggregating INR 1,872.74 crore, subject to shareholders and necessary regulatory approvals
• Post Preferential allotment, Kubotas investment in Escorts will be 14.99%1
• Kubota will also make an Open Offer to the public shareholders of Escorts to acquire upto 26% of the share capital in accordance with SEBI Regulations
• Current promoter group (Nanda Family) are not selling any shares of the Company
• With a goal of making Escorts the exclusive vehicle of business in India and simplifying the corporate structure, Escorts and Kubota have decided to take necessary steps to evaluate and consider the feasibility of merger of Kubotas Subsidiaries in India where Escorts is also a partner [i.e., Kubota Agricultural Machinery India Pvt. Ltd (KAI) & Escorts Kubota India Private Limited (EKI)] into Escorts, subject to necessary approvals.
• The Board of Directors of Escorts has agreed to evaluate and consider the feasibility of cancelation of all the residual equity stake of Escorts held by the Escorts Benefit and Welfare Trust (besides the pending capital reduction) without payment of any consideration and the merger of Escorts Finance Limited into Escorts, subject to necessary approvals.
• To reflect the spirit of joint partnership, upon completion of this transaction, the name of the company shall be changed to ‘Escorts Kubota Limited subject to regulatory approvals.
• Kubota intends to have Mr. Nikhil Nanda engaged in his individual capacity as a non-employee with the proposed designation of senior managing executive officer and General Manager of Value-Innovative Farm and Industrial Machinery Strategy and Operations of Kubota, besides a proposal to induct him as a director on the Board of Kubota European business holding company, Kubota Holdings Europe B.V., Netherlands. Mr. Nikhil Nanda non-employee involvement in the foregoing capacity will not interfere with his role as the CMD of Escorts. There will be no remuneration payable to him for these services.

Strategic Rationale

• Creating one of the largest Indo-Japan agriculture collaboration to attain global leadership in Farm Equipment Sector
• Escorts to be the exclusive vehicle for manufacture and sale of certain products in India and for sourcing from India (existing and products to be jointly developed in future)
• Escorts will also house a major R&D and Innovation Centre to offer cutting-edge products and new alternative technologies
• Seamlessly integrating Kubota global reach and world class business processes and Escorts proven capabilities in frugal engineering and manufacturing
• This partnership is committed to enhance customer prosperity and accelerating mechanization with the most cost-competitive technologies in India and across the globe

Explaining the strategic intent, Nikhil Nanda, CMD, Escorts Limited, said `We are delighted to embark on a journey of global leadership in agri-machinery in partnership with Kubota Corporation. I am pleased to announce the enhancement of Kubota current holding in the company. This will enable both companies to enhance the value they have created by leveraging each other strengths – be it in technology, market access, manufacturing processes or engineering excellence. With this Escorts is positioned to become an institution that will serve Indian and global farmers for decades and centuries. While Escorts is known for its stronger India presence with proven strengths in frugal engineering and manufacturing, Kubota brings world-class processes and global reach and expertise. The construct of the new collaboration shall be based on excellence and innovation to cater to the needs of customers globally, addressing food security and environmental challenges by providing smart agriculture and infrastructure solutions. The transaction will catapult Escorts to a different level of expertise, size and growth. I am proud that Escorts has taken the leap into the future with this partnership.`.

Yuichi Kitao, President and Representative Director, Kubota, Japan, said, `The journey between Kubota Corporation & Escorts Limited, which began in 2016, has reached a major milestone today with signing of a historic agreement. I would like to express my gratitude to everyone at Kubota & Escorts for their efforts. Both Kubota Corporation & Escorts Limited have a legacy of more than 130 and 75 years respectively. The combined entity and the larger collaboration will provide advanced farm mechanisation solutions to address global food security & enhanced farm productivity. We are extremely proud and excited to unite for the future as a One Company`

The transaction is subject to customary regulatory and other approvals and closing conditions

JM Financial acted as the financial advisor, Transaction Square acted as the transaction advisor and DMD Advocates acted as the legal advisor to Escorts Limited.

About Escorts:

Escorts (Market Cap: ~US$3 Bn) is among India leading engineering conglomerates, operating in the high growth sectors of Agri Machinery, Material Handling, Construction Equipment and Railway Equipment. The Group has earned the trust of over 5 million customers by way of product and process innovations over seven decades. Escorts endeavours to transform lives in rural and urban India by leading the revolution in agricultural mechanization, modernization of railway technology and transformation of Indian construction.

About Escorts:

Kubota Corp. (Market Cap: ~US$ 24 Bn) is a global manufacturing company, specializing in agriculture, water, and living environment products, with a worldwide network spread over100 countries. Kubota research and development values thorough hands-on approach. As an agricultural and water expert, we challenge and attain the future of food, water, and the environment, realizing our customer needs. Through proactive management, user-friendly products, and stable support, Kubota has been a leader in global agriculture and water-related industries.