Hindustan Construction Company (HCC) on Monday agreed to acquire a controlling stake in Karl Steiner AG (KSAG), the second largest total services contractor in the Swiss real estate market.

KSAG specialises in turnkey development of new buildings and refurbishments and offers services in all facets of real estate construction.

HCC will acquire 66 per cent stake in KSAG through the issuance of new shares in consideration for around Rs.150 crore (35 million Swiss franc) cash investment. On its part, KSAG will use the proceeds for its Swiss operations and the growth of the company's core business in India's residential and commercial construction market. The transaction is subject to approval of Swiss and Indian authorities and is expected to close in the second quarter of 2010.

KSAG is a 95 year old company and in accordance with the succession progress, KSAG's sole owner Peter Steiner will sell the remaining shares (34 per cent) to HCC in 2014. Till then, he will fully support HCC's management of KSAG as Vice-Chairman. The company had a turnover of 700 million Swiss franc last year.

This is HCC's first overseas acquisition and will be funded by the company's internal accruals and debt. HCC will not be taking on any liabilities. HCC will benefit from an entry into the lucrative integrated building construction market in India. Addressing the media, HCC Chairman and Managing Director Ajit Gulabchand said “the opportunity came up when we were discussing for a joint venture with KSAG and Mr. Peter Steiner, the 100 per cent owner, offered to sell it as the company, like the rest of Europe, was a facing a tough time with the downturn. However, Switzerland was to an extent, insulated from the rest of Europe.

“This acquisition has been carried out on grounds of strategic fit both to capture local market opportunity and to provide us with a presence for European expansion,'' said Mr. Gulabchand.

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