Motherson Sumi Systems Ltd (MSSL), India’s largest auto component maker and flagship company of the Samvardhana Motherson Group (SMG), has pegged the deal value to acquire 80 per cent stake in Germany-based Peguform Group at €141.5 million ($200.25 million), making it one of the biggest overseas acquisitions in the auto component space.
Last week, Motherson Sumi has struck a deal to buy a majority stake in Peguform Group through a joint venture (in which Motherson Sumi will have 51 per cent share while Samvardhana Motherson Finance Ltd will hold 49 per cent share) for an undisclosed amount. The deal has been struck with Cross Industries who will hold 20 per cent stake in the company.
The total consideration for 80 per cent of shareholding of the Peguform Group is €141.5 million ($220.25 million or Rs 890 crore), of which MSSL share will be worth €72.16 million (Rs 453 crore). The deal is expected to be completed by end of September.
The company has appointed ICICI Bank Ltd as the mandated lead arranger for financing the entire transaction.
During mid-day trade on Monday, Motherson Sumi scrip was up 0.7 per cent at Rs 239.20 on BSE.
Peguform is a global supplier of interior and exterior products for the automotive and related industries. The company manufactures and distributes bumper systems, plastic components for vehicle exteriors, vehicle cockpits, dashboards and vehicle interior trims. Peguform had posted annual sales of €1.37 billion ($1.72 billion or Rs 8,625 crore) in 2010 and EBIDTA of €66.87 million ($93.5 million or Rs 421 crore). Therefore, the deal has been struck at 2.8 times EBITDA for 2010.
The company is the second largest supplier of door panels and the third biggest supplier of instrument panels in Germany. Also, Peguform is one of the market leaders for bumper systems in Germany and holds a key position for cockpit assemblies in Spain. The company has a notable presence in Europe, supplying to premium German brands like Volkswagen Group, BMW, Porsche, Daimler and others like PSA Peugeot Citron, Renault-Nissan and GM.
This transaction will strengthen Motherson Sumi’s position as India’s largest auto component company in terms of revenues. It has reported 21 per cent increase in revenues to Rs 8, 371 crore, with profit after tax rising to Rs 391 crore for FY11. Motherson Sumi had debt of Rs 1,263.5 crore in FY11, with a net debt-to-equity ratio of 0.6.
Motherson Sumi has been in the field of plastic moulding, assemblies and module integration for more than a decade. On the other hand, the Peguform product range has strong synergies with the existing products of SMG in terms of plastic injection moulding, door panels, instrument panels and bumpers. This acquisition will provide new technologies and depth to the polymer product range of the group.