Arvind (500101) M&A announcement summary

Deal rationale and strategic fit

• Acquisition provides immediate manufacturing presence and entry into the US, the largest market for needle-punch nonwovens and technical textiles, leveraging an established platform.

• Expands global footprint, enhances resilience, and reduces supply chain risk amid geopolitical uncertainties.

• Adds Dalco-GFT as a new vertical, complementing existing businesses and expanding into automotive, geotextiles, furniture, and construction sectors.

• Access to a $2.5 billion total addressable market in the US across multiple high-growth segments.

• Strengthens customer relationships with 88% sole-source positions and ensures management continuity.

Financial terms and conditions

• 61% controlling stake acquired at a $136 million valuation, representing 7.75x CY2025 EBITDA.

• Acquisition financed through a mix of debt at both Dalco-GFT and AAML, optimizing tax benefits and enabling rapid deleveraging.

• Margin and EPS accretive from year one, with post-acquisition financial ratios within covenants.

• Seller retains significant equity, with remaining tranches to be acquired over two and four years for full ownership.

• Dalco-GFT reported ~$100 million revenue, ~17% EBITDA margin, and ~40% ROCE in CY25.

Synergies and expected cost savings

• Cross-selling and technology integration between India and the US expected to drive 18-20% growth and expand addressable markets.

• Filtration business adjacency enables expansion into US filtration markets and complements existing industrial products.

• Highly automated operations minimize workforce expansion needs, supporting cost efficiency.

• Capacity expansion and value-added mix shift expected to drive growth and margin expansion.

• Expands customer base by 75+ active customers, with 88% sole-source position.