Aurangabad-based privately held auto component maker Varroc Group is acquiring automotive lighting business of NYSE-listed Visteon Corporation for $92 million in cash. The transaction, which is subject to regulatory reviews and other conditions, is expected to be completed in the third quarter of 2012, according to a company statement.
The business being acquired includes a range of exterior lighting products supplied to global vehicle manufacturers, including front and rear lighting systems, auxiliary lamps and key subcomponents such as projectors and electronic modules. The unit had revenues of $531 million in 2011 with operations in Europe, North America and Asia.
This deal would almost double the revenues of Varroc Group, which had earlier projected to hit the Rs 3,400 crore mark in the current fiscal, making it one of big names in Indian auto component space behind Motherson Sumi Systems but ahead of other large names such as Amtek.
Varroc Group supplies components for both passenger and commercial vehicles including polymer, electrical and electronics, and metallic products. It has approximately 5,000 employees at 20 manufacturing plants in India, five in Europe and one in Southeast Asia.
Tarang Jain, managing director, Varroc Group, said, “Visteon’s lighting business is a successful operation with strong products, technology and customer relationships. Upon completing this transaction, we look forward to working with the customers and talented associates of this business to focus on growing what will be a very important part of our global business in the future.”
In a separate report news agency PTI quoted the company Jain as saying that the group is looking to raise money from private equity firm to fund the transaction.
This is Varroc’s second overseas acquisition in as many months. In February, it acquired majority stake in Italy-based TriOM SPA for an undisclosed amount, according to VCCEdge, the financial research platform of VCCircle. TriOM SPA is engaged in manufacturing of auto parts for two-wheelers including head-lights, front and rear flashers, tail lights, rear view mirrors, carriers and handle seats, license plate lights and reflex reflectors. Five years ago Varroc forayed into Europe in forgings space by acquiring IMES Spa in Italy and Poland.
Another PE-backed company in automotive lighting space is Halonix which is majority owned by Actis. Warburg Pincus-backed electrical products maker Havells also has a large non automotive lighting business.
Visteon operations that would transfer to Varroc include manufacturing and engineering facilities in Nov Ji?ín and Rychvald, Czech Republic; Monterrey, Mexico and Pune, India. The companies to be part of the sale include Visteon’s equity interest in a China-based lighting joint venture, Visteon TYC Corporation.
In total, about 4,200 manufacturing, engineering and administrative employees are part of the lighting business that is involved in the transaction.
“This transaction allows Visteon to focus on our core climate and electronics businesses and our joint venture relationships, which are positioned for profitable growth and market leadership,” said Donald J. Stebbins, Visteon chairman, chief executive officer and president.
Last July in one of the biggest overseas acquisitions in the auto component space, Motherson Sumi Systems Ltd, India’s largest auto component maker and flagship company of the Samvardhana Motherson Group, had 80 per cent stake in Germany-based Peguform Group for €141.5 million ($200.25 million). Motherson Sumi had three years ago acquired the assets of the world’s largest automotive rear view mirror maker Visiocorp in a stock cum cash deal. The acquired businesses turned in sales of €660 million in 2008.