Mahindra CIE Automotive Ltd, which counts homegrown private equity firm Kedaara Capital as a minority shareholder, announced on Tuesday that it has agreed to acquire fellow automotive components manufacturer Aurangabad Electricals for Rs 875.9 crore ($125 million).
In a stock-exchange filing, Mahindra CIE said the acquisition will enable it to enter the automotive aluminium die-casting business. The deal will also strengthen Mahindra’s presence in the two-wheeler segment and is value-accretive, said the company’s chief executive officer Ander Arenaza.
The transaction is expected to close by April 10.
Aurangabad Electricals Ltd was founded in 1985. The company has five manufacturing facilities in Aurangabad, Pune and Pantnagar and is a supplier to several two-wheeler auto component makers.
Its turnover grew to Rs 651 crore in the financial year 2017-18 from Rs 569 crore the previous fiscal.
Shares of Mahindra CIE Automotive closed 0.79% lower at Rs 238.20 apiece on the NSE on Tuesday, where the benchmark Nifty rose 1.19%.
The Mahindra Group had joined hands with Spanish auto parts supplier CIE Automotive in September 2013 to form an automotive components supply network with operations in North America, South America, Europe and Asia. It makes engine gears, crankshafts, turbocharger housings and sheet metal stampings, among other products.
Mahindra had acquired a 13.5% stake in CIE SpA while retaining 20% direct ownership in the new firm, Mahindra CIE Automotive.
In 2016, Mahindra CIE Automotive acquired Kedaara-backed Bill Forge, which manufactures forged and machined components for automotive firms, for Rs 1,331 crore (around $200 million) in a cash-and-stock deal.
Through this, Kedaara Capital also acquired some stake in Mahindra CIE.
Last year, CIE Automotive picked up an additional 5% stake in Mahindra CIE to take its total stake to 56.32%.
VCCircle reported last year that Kedaara had bought the entire business of Sunbeam Auto Pvt. Ltd, one of Asia’s largest aluminium die casting and piston makers.
In another major deal in the space, US multinational private equity giant Blackstone had acquired Chennai-based auto component maker Comstar Automotive Technologies Pvt. Ltd for about Rs 1,000 crore ($150 million) earlier in 2018.
