Auto component maker Motherson Sumi has acquired the world’s largest automotive rear view mirror maker Visiocorp in a stock cum cash deal. The firm has acquired all the subsidiaries of UK-based Visiocorp for around €25 million or $31.63 million (about Rs 163 crore) in cash plus 5% equity in the special purpose vehicle (SPV) used for the transaction. The 5% stake has face value of €1.5 million or $1.9 million.
After the acquisition, the company will emerge as the largest player globally with clients such as General Motors, Hyundai, Ford, Volkswagen, Renault and BMW. The deal will also bring manufacturing units spread across various countries including US, Mexico, UK, South Korea, China, France, Spain, Hungary and Australia.
According to the transaction aggrement, the SPV named Samvardhana Motherson Visiocorp Solutions Ltd (SMVSL) has acquired all the assets of Visiocorp which itself is in administration (or turned sick in Indian parlance). Motherson will not take over the debt of the firm though it will assume small debt of the subsidiaries.
The SPV - SMVSL - is 95% owned by a joint venture firm of Motherson group - Samvardhana Motherson Global Holdings (in which public listed Motherson Sumi and Samvardhana Motherson Finance Ltd hold 51% and 49% each). Samvardhana Motherson Finance is an unlisted public limited company controlled by the Sehgal family, who are the promoters of Motherson Sumi. The remaining 5% of the SPV is part of the equity component of the deal.
The acquired businesses turned in sales of €660 million in 2008. Though further financial details on bottomline of Visiocorp is not available its likely that it turned adverse compared to its EBITDA of about €48 million in 2007, given the deal value.
Motherson Sumi group which makes diverse auto parts including wiring harness, air compressors, metal parts and fuel pump parts, has 12 joint venture companies and enjoys 45% domestic market share in mirrors for passenger cars. It also has a joint venture with Visiocorp for the domestic market under which it holds 49%. The deal makes it one of the biggest global makers of automotive mirrors.
The deal comes at a time when outbound M&A from India has slowed down as funding has eased due to the liquidity crisis. But, the transaction shows Indian companies are even now looking at distressed assets which go up for sale as the economic recession in the west force many companies to shut shop
The deal, however, comes at a bad time as the global automotive market is seeing serious drop in demand. But it can be seen as the build up for companies in emerging markets to form a global base for the next uptick in business cycle.