The joint venture will be owned 51% by Dixon Technologies and 49% by Vivo Mobile India, with neither company holding any stake in the other. The proposed entity will manufacture electronic devices, including smartphones, undertake part of Vivo Mobile India’smartphone OEM orders in India and can also manufacture electronic products for other brands.ALSO READ | Dixon Tech shares jump 12% in four sessions, cross JPMorgan’s target on Vivo deal hopes
The joint venture will be incorporated with an initial paid-up share capital of ₹5 crore, to be contributed by Dixon and Vivo Mobile India in the 51:49 ratio. No consideration has been exchanged between the parties as the company is yet to be incorporated. At closing, the joint venture will purchase certain manufacturing assets and enter into a manufacturing and packaging agreement with VMI for execution of part of its OEM orders.
The shareholders’ agreement will govern the rights and obligations of both shareholders in the management and operations of the joint venture. It provides for two nominee directors each from Dixon and VMI on the board, information and inspection rights, and customary provisions relating to reserved matters, pre-emptive rights, transfer restrictions, representations, warranties and dispute resolution.The transaction is subject to completion of customary conditions precedent and applicable statutory and regulatory approvals. The outer timeline for completing the conditions precedent is one year from the execution of the joint venture agreement, or such other date as may be mutually agreed.
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Dixon said the joint venture will become its subsidiary after incorporation. The investment will be made through cash consideration, with the subscription price to be determined based on valuation reports obtained by the joint venture in accordance with applicable law.
The company said the transaction will become a related party transaction after incorporation of the joint venture, as it will be its subsidiary, and will be carried out on an arm’s-length basis. It added that VMI is not related to Dixon’s promoter or promoter group.
Dixon said the partnership is expected to strengthen its manufacturing capabilities, execution abilities and position in India’s Android smartphone ecosystem.
Shares of Dixon Technologies (India) Ltd ended at ₹13,490.00, up by ₹562.20, or 4.35%, on the BSE.
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