June 3, 2008 / 1:18 PM / 11 years ago

UPDATE 1-Hanung Toys close to buying 3 cos overseas-CMD

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By Narayanan Somasundaram and Aniruddha Basu

MUMBAI, June 3 (Reuters) - Hanung Toys and Textiles Ltd (HATT.BO) is close to buying three companies overseas in deals worth $30 million, as it looks to expand globally, a top official said on Tuesday.

Hanung, which makes home textiles and stuffed toys, plans to buy one firm in U.S, take a stake in another US firm and buy a toy maker in China, Chairman and Managing Director Ashok Bansal told Reuters over telephone.

“Within the next one month we will be able to sign both the MOUs in U.S.,” Bansal said.

The deal in China is expected to close in the next two months, he added. “We are in the final negotiations stage.”

The Chinese firm will help Hanung boost its toy capacity, Bansal said.

“We need to boost up our capacity for toys, as our textile share is increasing, but toys are falling,” he said.

The U.S. firms, both of which are home furnishing product makers, are front-end companies which sell through retailers, and will enable Hanung to get additional sales.

The deals will be funded through a mix of debt and internal accruals, with most of it being debt, Bansal said, adding an Indian bank was arranging the debt component of the funding.

Indian textile firms have acquired retail and distribution firms overseas to service their expanded capacities.

Welspun India (WLSP.BO) acquired a 85 percent stake in U.K-based towel maker Christy’s in 2006 and Portugese firm Sorema last year.

Rival Alok Industries (ALOK.BO) bought 60 percent of Czech firm Mileta in September, 2007.

Shares of Hanung Toys closed down 2.78 percent at 223.70 rupees in a weak Mumbai market. (Editing by Prem Udayabhanu)

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