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Why are shares of this footwear brand locked in an upper circuit?

Why are shares of this footwear brand locked in an upper circuit?

Why are shares of this footwear brand locked in an upper circuit?
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By CNBCTV18.com Oct 20, 2022 12:17 PM IST (Updated)

Cravatex had a market capitalisation of Rs 98 crore as of Wednesday's closing. Metro Brands is acquiring Cravatex for Rs 202 crore.

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Shares of Cravatex Ltd. surged 20 percent on Thursday after the company announced that it will sell its entire stake in Cravatex Brands, a material subsidiary, to Metro Brands Ltd.

Metro Brands will pay Rs 202 crore for the transaction double that of Cravatex's market capitalisation as of closing on Wednesday, which stood at Rs 98 crore.

The acquisition will enable Metro brands to expand their presence in the sports and athleisure space in the country.
As of March 31, 2022, Cravatex had a total outstanding debt worth Rs 163 crore.
The acquisition is likely to be completed within the next 90 days.

Cravatex, a licensing, distribution, and sourcing company, has the exclusive long‐term license for the Italian sportswear brand FILA. It also owns the sportswear brand Proline and represents other international brands.

The acquisition is based on the fulfillment of closing conditions by both parties. Paragon Partners, an existing investor in Cravatex Brands Ltd., will also sell its entire stake as part of this transaction.

Metro Brands also reported its September quarter results last evening where all parameters grew on a year-on-year basis, however, the results appeared weak when compared to the June quarter.

Shares of Cravatex are locked in a 20 percent upper circuit at Rs 455.60 while those of Metro Brands are trading lower by over a percent as of noon.
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