Motherson Sumi to buy Finland's PKC for $609 million

NEW DELHI: Motherson Sumi Systems Ltd said it has agreed to acquire Finnish wiring harness maker PKC Group Plc for about Rs 4 http://www.trunity.net/profile/pngtojpgs/ 150 crore setting in motion one of the biggest buyouts by an Indian auto parts maker. The company on Friday said it will launch a public tender offer to fully acquire PKC Group through a fully-owned subsidiary to be set up for the purpose by March end. Noida-based Motherson Sumi Systems is a joint venture between domestic auto component maker Samvardhana Motherson Group and Sumitomo Wiring Systems of Japan. The proposed deal will be funded through MSSL s internal accruals and the Rs 1 993 crore it had raised through a qualified institutional placement in September last year. The prospect of two global teams coming together and the synergies that will be brought about is very exciting to us MSSL chairman Vivek Chaand Sehgal said. It will allow us to create huge value for our customers and service our customers in additional locations in the world. The deal will enable the company to expand its presence in the niche market of global wiring harness business for commercial vehicles. The wiring harness business registered revenues of around 800 million in the last financial year said MSSL s CFO GN Gauba. INORGANIC GROWTH KEY The turnover from this segment will more than double post the completion of this acquisition Gauba added. The combination of MSSL and PKC Group is expected to be value accretive http://docxspdfs.blogocial.com/ since there is minimal overlap between their existing operations in terms of geographical presence and synergies in product segments. As per preliminary estimates PKC Group clocked revenue of Euro 846 million in 2016. Inorganic growth has been the key in growing Motherson Sumi s presence globally said VG Ramakrishnan managing partner at Avanteum Advisors LLP. In fact most of the acquisitions that the group has made have been on the recommendations of clients. So it has not only helped them scale up operations internationally but also gain in https://500px.com/lathifmaahi12392/about terms of clientele. Headquartered in Helsinki PKC Group is a tier-I global supplier of wiring harness and associated components to manufacturers of heavy and medium duty commercial vehicles and locomotive segments across North America Europe Brazil and China. MSSL s board of directors had on Thursday approved the proposal to launch a voluntary recommended public tender offer for the acquisition of issued and outstanding share capital and voting rights of PKC Group. PKC shareholders are being offered a cash consideration of Euro 23.55 for each share/options in PKC representing an aggregate equity purchase price of approximately 571 million in an open tender offer MSSL said in a statement. The shares of PKC Group are currently listed on the Nasdaq Helsinki stock exchange. MSSL and PKC Group entered into a combination agreement for the proposed transaction which is subject to the completion of closing conditions and receipt of necessary regulatory approvals. ALSO READ Motherson Sumi firing on all cylinders Earnings downgrades for Motherson Sumi Motherson Sumi s Q2 net up 25% Motherson Sumi rises 3% on PKC Group acquisition Motherson Sumi Systems dips on profit booking post Q1 results span.p-content div id =div-gpt line-height: 0px; font-size: 0px; MOTHERSON http://www.dance.net/u/todolistiphone SUMI SYSTEMS (Vivek Chaand Sehgal chairman) Car parts maker and engineering group Motherson Sumi Systems Ltd has agreed to buy Finnish truck wire maker PKC Group for 571 million euros ( 609 million). Combining the two companies will create a leading supplier of wiring systems and components for the worldwide transportation industry PKC said in a statement. Business Standard is republishing a part of this 2016 article on Vivek Chaand Sehgal the man who set up Motherson Sumi: In times when under-promise and over-deliver is the order of the day few would dare to place lofty targets before stakeholders. And those who do this successfully tend to create history. This is exactly what billionaire Vivek Chaand Sehgal co-founder and chairman of the 6.9 billion Samvardhana Motherson Group is in the process of doing. Sehgal s journey in the world of business started at the age of 18 when he tried his hand at silver trading. In 1977 he set up Motherson along with his mother to manufacture power cables. His foray into the auto component sector began in 1983 when his company entered into a technical agreement with Tokai Electric (now Sumitomo Wiring Systems) to manufacture wiring harnesses for Maruti Udyog. In 1986 Sehgal formed his first joint venture with Sumitomo Wiring Systems which led to the establishment of the group s flagship company Motherson Sumi Systems. Motherson Sumi is now one of the largest auto ancillary companies in India. Success is best measured in numbers and Sehgal s company is easily a chart-topper by this yardstick. Sehgal says that modern-day gurus have taught him three things: top-line vanity bottom-line sanity and that there s no better reality than having cash in the bank. Even though the company began its journey in the automotive sector in the 1980s the company has grown at breakneck speed since 2000. Its revenues have grown at a compounded rate of 44 per cent between 2001-02 and 2014-15 while profit has grown at 35 per cent. A large part of this growth has come inorganically. His future projection too is a mix of organic and inorganic drivers. Corporate history may be littered with failed acquisitions and joint ventures but Sehgal has built his empire through a string of acquisitions - seven at last count. Some of these were made when the world was struck by the biggest financial crisis since the Great Depression. The first big acquisition was in 2009 When Motherson acquired the rear-view mirror business of Visiocorp plc UK and rechristened it Samvardhana Motherson Reflectec (SMR). This acquisition is relevant not only because it was made at the peak of the recession but also because the size of the company Sehgal was taking over was larger than his own. Today SMR is one of the largest manufacturers of rear view mirrors in the world. This acquisition propelled the Samvardhana Motherson Group on to the world stage as an established global tier-I supplier. In 2014-15 the company closed three other acquisitions - those of Stoneridge a wiring harness business in the US; Minda Schenk an interior and exterior plastic parts maker in Germany; and Scherer & Trier an extrusion and hybrid parts maker also in Germany. The company has consistently achieved all the five-year targets it set for itself. After exceeding the 5 billion sales target in 2014-15 Motherson set a new target. Earlier this year when investors pummelled the stock after Volkswagen was caught in a storm over its emission-cheating software - Motherson derives over 44 per cent of its sales from the Volkswagen group - Sehgal remained unruffled. He reiterated that the company was on course to clock revenues of 18 billion by 2019-20 and in the process no customer country or component would account for more than 15 per cent of sales. While there would be some impact on volumes in FY16 thanks to the Volkswagen issue JM Financial expects consolidated earnings to grow at a compounded 35 per cent a year between FY15 and FY18 supported by 17 per cent annual growth in revenues and a 280-basis points margin improvement. Given the company s past record of meeting aggressive targets investors are buying into Sehgal s vision this time around too. Setting high targets and achieving them have become a habit for Vivek Chaand Sehgal chairman of the 7bn Samvardhana Motherson Group and a man known for his deep-rooted belief in the Divine. New Delhi: India s largest auto parts maker Motherson Sumi Systems Ltd (MSSL) has offered Rs4 150 crore to acquire Finland s PKC Group Oyj as it works towards becoming an 18 billion company. The public tender offer to buy out some or all the shareholders was made at a 51% premium to PKC s closing stock price on Thursday on the Nasdaq Helsinki stock exchange. The transaction has been approved by the boards of both companies. PKC is a leading supplier of wiring harness to companies that make heavy- and medium-duty commercial https://www.brewtoad.com/users/101759 vehicles and locomotives across North America Europe Brazil and China. It ended 2016 with revenue of 846 million (around Rs6 150 crore).The acquisition will be made through a 100% subsidiary of Noida-based MSSL. The transaction is expected to be completed by the end of March 2017.MSSL chief financial officer G.N. Gauba said in an interview that the acquisition will be funded by Rs2 600 crore raised through share sales to financial institutions and a preferential allotment.The company also has around Rs2 610 crore of cash on its books on a stand-alone basis he said. On a consolidated basis it has cash holdings to the tune of Rs5 940 crore but it also has debt of Rs8 115 crore at the end of the September quarter. On a standalone basis it has debt of Rs311 crore. The prospect of two global teams coming together and the synergies that will be brought about is very exciting to us. It will allow us to create huge value for our customers and to service our customers in additional locations in the world said Vivek Chaand Sehgal the 60-year-old chairman of MSSL.Sehgal set up a silver trading company Motherson with his mother in 1975. With the money he made from trading in silver Sehgal set up a factory to make wires but it bled. Sehgal s fortunes turned in 1983 when he signed up as a supplier to what is today India s largest car maker Maruti Suzuki India Ltd. Between 2002 and 2016 Motherson Sumi has acquired 14 companies in the auto parts space. Its revenue expanded from Rs100 crore in 1999-2000 to Rs38 853 crore in 2015-16. MSSL is also in the business of wiring harness. The proposed acquisition of PKC would help expand its presence in the commercial vehicles segment. MSSL claimed that there is minimal overlap between existing operations of the two companies in terms of a geographical presence. An analyst said he was concerned about MSSL s debt at the group level. As a group they are in debt. Crucial question will be how much debt will come on the group s books (because of the acquisition) the analyst said on condition of anonymity. The other problem in these Scandinavian countries is that labour regulations are very tight. The financial obligation for that will http://www.dead.net/member/snapchatapp be very high the analyst added.MSSL s Gauba said neither is a concern at the moment. PKC has a debt of around 47 million (around Rs341.7 crore) Gauba of MSSL said.Shares of PKC were trading up 50% at 23.40 in early trading in Helsinki on Friday. Motherson Sumi shares rose 0.18% to Rs326.40 at the close of trading on the BSE on a day the benchmark Sensex fell 1% to 27 034.50 points.Amrit RajTopics: Motherson Sumi PKC Group Finland Acquisition MSSL Reliance Securities has Sell call on Motherson Sumi Systems Ltd. with an intra-day target price of Rs 320 .The current market price of Motherson Sumi Systems Ltd. is Rs 329.15. Reliance Securities recommended to keep stoploss at Rs 335. Reliance Securities has a buy call on Motherson Sumi Systems Ltd. with a target price of Rs 338 . The current market price of Motherson Sumi Systems Ltd. is Rs 328.75. Time period given by analyst is Intra Day when Motherson Sumi Systems Ltd. price can reach defined target. Reliance Securities recommended to keep stop loss at Rs 324 . ALSO READ Motherson Sumi launches up to 300 million share sale Motherson Sumi slides after Q1 results Motherson Sumi Systems consolidated net profit rises 26.17% in the September 2016 quarter Motherson Sumi Systems standalone net profit declines 0.48% in the September 2016 quarter Motherson Sumi Systems standalone net profit declines 10.27% in the June 2016 quarter span.p-content div id =div-gpt line-height: 0px; font-size: 0px; On 13 February 2017Motherson Sumi Systems announced that a meeting of the Board of Directors of the Company will be held on 13 February 2017 inter alia to consider and approve the Unaudited Financial Results of the Company for the quarter ended 31 December 2016 (Q3).Powered by Capital Market - Live News (This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)