Electrical equipment major, Legrand has signed a definitive agreement with Numeric Power Systems to acquire the latter’s UPS business (uninterrupted power supply) for Rs 837 crore. The two parties have entered into a business transfer agreement whereby Numeric would convey three of its factories, trademark, brand and intellectual property rights to Legrand. It would continue with other businesses such as solar and wind power, iron and alloy foundry production, and LED lighting.

Numeric’s share price hit the upper circuit on Friday at Rs 280.25, which was 20 per cent more than the previous day’s closing price. For 2010-11, the company reported net profit of Rs 40.22 crore for revenue Rs 485 crore. Close to 80 per cent of its turnover was contributed by the UPS segment. Numeric has nine production sites with a workforce of about 2,500.

R Chellapan, managing director of Numeric, said: “The board of directors has unanimously approved the sale and has recommended a special dividend to shareholders out of the proceeds. The dividend percentage will be decided once the merger gets through with necessary statutory and regulatory approvals. We would be investing the proceeds in our other businesses, especially solar. Numeric is setting up 1 mw plants each in Coimbatore and Sivaganga. Our focus would be on solar energy generation and solar power storage products.”

The Indian UPS market including home and industrial segments was worth about $600 million in 2009. It has been growing by at least 15 per cent every year.

The Numeric association is Legrand’s second big buy in India after it acquired the switchgear business of Indo Asia Fusegear for about Rs 600 crore in 2010. The company started operating in the UPS market only two years ago. Numeric would be its operating arm in Asia. The transaction comes after Legrand’s acquisition of Inform of Turkey, Meta System Energy of Italy and SMS of Brazil.

“We are working towards building a four company network (for the UPS business) of pole expertise on three continents,” said Yves Martinez, managing director of Legrand India. “It is our objective that Numeric, Legrand and Indo Asian Switchgear will keep their current network, product catalogue, teams, commercial terms and continue to develop fast on their own. We intend to accelerate the growth rate of all brands by continuing sustained growth investments such as the launch of new products, addition of commercial manpower and international expansion.”

While Ambit Corporate Finance was investment banker to Legrand on the transaction, Ernst & Young provided assistance on financial and tax due diligence.