Farm machinery major Escorts Ltd and Kubota Corporation on Thursday announced a deal under which the Japanese partner will acquire an additional 5.9 per cent stake in the Indian firm for Rs 1,872.74 crore, paving the way for the latter to become a majority stake holder for which it could invest nearly Rs 10,000 crore.

In a multi-structured deal, Kubota will increase its stake in Escorts to 14.99 per cent after a preferential issue of 93.64 lakh equity shares at an issue price of Rs 2,000 per share, aggregating to Rs 1,872.74 crore. It will become a joint promoter in Escorts.

Kubota, which currently has a 9.09 per cent stake in Escorts, will then make an open offer to the public shareholders to acquire up to 26 per cent of the share capital in accordance with Sebi regulations at the same price as the preferential issue, Escorts said in a statement.

In a separate regulatory filing, Escorts said Kubota Corporation is making an open offer to its public shareholders to acquire up to 3.75 crore fully paid-up equity shares representing 26 per cent stake at a price of Rs 2,000 per share, aggregating to Rs 7,498.31 crore assuming full acceptance.

In the event of the open offer being fully subscribed, Kubota’s stake in Escorts would increase to 44.80 per cent after the first capital reduction.

As part of the deal, there will be selective share capital reduction of the firm by cancelling and extinguishing all the residual equity shares currently held by the Escorts Benefit and Welfare Trust, a promoter entity, without payment of any consideration to the aforesaid trust, the company said in a regulatory filing.

Kubota Corporation will become a joint promoter along with Escorts’ existing promoter Nanda family, who currently hold an 11.6 per cent stake in the company but are not selling any of their shares under the deal.