New Delhi, April 20 - Kanoria Chemicals and Industries Limited (KCI) Friday said it would acquire APAG Holding AG, the Switzerland-based holding company of its wholly owned subsidiary APAG Elektronik AG, Switzerland.

"KCI today entered into a share and loan purchase agreement to acquire APAG Holding AG," the company said in a statement.

APAG Elektronik is engaged in the development and sale of electronic and mechatronic modules and control devices for the automotive, consumer goods, power tool electronics and building automation industries.

KCI will acquire 90 percent stake in APAG Holding on closure of the transaction for a purchase consideration of CHF (Swiss franc) 6.39 million ($7 million) while the balance 10 percent stake will be acquired by 2014 on the basis of a pre-fixed pricing formula.

As a part of the transaction, KCI will also take over the loan amounting to CHF 1.30 million provided by the selling shareholders to the group.

"After the disinvestment of our Chloro Chemicals business in May 2011, KCI has been exploring diversification in knowledge-based high growth areas," said R.V. Kanoria, chairman and managing director of KCI.

"APAG which is known for its acumen in product designing and engineering, and is a reliable partner to the high end automotive segment in Europe, fits well into KCI's strategy," he added.

He also said that with fast increasing demand in the high end automotive segment both in India and the rest of the world, the knowledge base of APAG can be leveraged for future expansion in various geographical segments.

The transaction is expected to be closed in May 2012 and is subject to customary closing conditions. KCI will be funding this transaction out of internal accruals.