Dixon Tech shares surge after announcing joint venture with Vivo

Dixon Technologies shares saw a significant surge after it announced a joint venture with Vivo Mobile India for manufacturing smartphones. As per the deal, Dixon will hold a 51% stake while Vivo will own the remaining 49% in the new JV company.

Shares of Dixon Technologies (India) Ltd surged 3.5 per cent in intraday opening trade on Friday, after the company announced the execution of definitive agreements with Vivo Mobile India Pvt Ltd (VMI) to establish a joint venture for manufacturing smartphones and other electronic devices in India. At the time of reporting the company share was trading at 13,840 up 2.69 per cent.

Joint Venture Details

The company informed stock exchanges on Thursday, that it has signed a joint venture agreement (JVA) and a shareholders' agreement with VMI to incorporate a joint venture company (JV Co.), subject to completion of customary conditions precedent. It also said VMI has received the Government of India's approval under Press Note 3 for incorporation of the joint venture and subscription of shares by VMI.

Under the arrangement, Dixon will hold a 51 per cent stake in the JV, while VMI will own the remaining 49 per cent. The company clarified that "neither the Company nor VMI will have any stake in each other."

According to the exchange filing, the joint venture "shall be incorporated to carry on the business as original equipment manufacturer (OEM) of electronic devices including smartphones." The company added that the JV "will undertake part of VMI's OEM orders of smartphones in India, and can also engage in OEM business of various electronic products of other brands."

The initial paid-up share capital of the joint venture will be Rs 5 crore, to be contributed by Dixon and VMI in the ratio of 51:49. At the closing of the transaction, the JV will purchase certain manufacturing assets and enter into a manufacturing and packaging agreement with VMI to execute part of the smartphone OEM orders.

Rationale for the Partnership

Explaining the rationale behind the partnership, Dixon said, "This association will bolster the Company's manufacturing excellence and superior execution abilities. This partnership will further strengthen the Company's foothold in the android smartphone ecosystem in India in line with Dixon's strategic goals."

The transaction remains subject to completion of conditions precedent and receipt of applicable statutory and regulatory approvals, where required. (ANI)

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