India’s leading contract maker Dixon Technologies has said it plans to buy a majority stake in Ismartu India, a manufacturing unit of Chinese phone maker Transsion Holdings, to expand its business.
Dixon will initially acquire 50.10% stake for Rs 238.36 crore in an all-cash deal while additional acquisition will be done in FY27 for an aggregate consideration, which shall be decided on the basis of a valuation of 20 times of profit after tax of Ismartu for FY26, Dixon said in a regulatory filing late Monday.
Dixon added that upon successful acquisition of the second tranche of shares, it will hold an additional stake between 1.60% to 5.90% in Ismartu India.
Sources say that ultimately Dixon plans to acquire around 55% stake in Ismartu, which manufactures features and smartphones for brands like Itel, Infinix and Tecno at its three factories in Noida. ET was the first to report on the proposed deal in its April 3 edition.
As per the filing, Dixon has entered into a share purchase agreement to acquire 50.10% stake in the first tranche from Ismartu Singapore, Transsion Technology Ltd, 5A advisors LLP.
“Tranche I shares will be acquired by the company for an aggregate initial consideration amount of Rs 238.36 crore, subject to pre-closing and post-closing adjustments in accordance with the terms of the share purchase agreement,” it said.
For FY23, Ismartu India had reported a turnover of Rs 6,235 crore.
“…this is a significant development. It’s an opportunity for the Indian contract manufacturers to partner with the technology giants from any country, and so is the case with China, to bring the best technologies, cost efficiencies, automation into the Indian manufacturing ecosystem,” Atul B Lall, vice chairman of Dixon Technologies, told ET.
He said that after the acquisition, the capacity of Dixon will increase by 10-12 million units.
Dixon, which is India’s largest electronics contract manufacturer, makes smartphones and feature phones for brands such as Xiaomi, Motorola, Samsung and Jio among others. It currently has a manufacturing capacity of 30 million smartphones and 50 million feature phones at its four plants in Noida.
“The combined expertise, resources, engineering prowess and other manufacturing capabilities of both the companies will further capitalize on growth opportunities in the burgeoning Indian EMS (electronics manufacturing services) industry,” Lall said.
According to Counterpoint, Dixon leads in mobile phone contract manufacturing with a 32% market share, followed by Foxconn, which makes iPhones, and DBG Group, which makes Xiaomi and Realme smartphones.
The deal comes amid greater scrutiny of Chinese companies operating in the handset ecosystem in India. The Centre wants Indian companies and executives to have more sway over the country’s mobile phone industry, currently dominated by Chinese handset brands, as part of an informal mandate.
Chinese companies have been under pressure in India over the past few years amid a spike in border tension. The move for a bigger Indian role in the mobile phone ecosystem is aimed at boosting local companies. Currently, Chinese handset brands have over 70% of the Indian mobile phone market.
Source: Economic Times