Motherson Sumi Systems Ltd (MSSL), the country's largest auto component maker and the flagship company of $5.4 billion Samvardhana Motherson Group (SMG), has signed an agreement with US-based Stoneridge Inc to acquire its wiring harness business through asset purchase for $65.7 million, as per a stock market disclosure.
This acquisition is subject to customary closing conditions and is expected to close in the third quarter of 2014.
The acquisition includes six manufacturing facilities located in Portland, Indiana; Chihuahua, Mexico; Saltillo Mexico and Monclova, Mexico; as well as an engineering and administrative centre located in Warren, Ohio. The acquired business has a turnover of approximately $300 million.
It will further strengthen MSSL’s presence in North America where the firm already has wiring harness business.
Stoneridge is a global designer of wiring harness and assembled instrument panels which it principally supplies to commercial vehicles, agriculture equipment, material handling equipment and off-highway vehicle segments.
"Being done through a wholly owned subsidiary, this acquisition with base revenues of approximately $300 million would provide us a strong launchpad for our 2020 targets. It’s a step further in MSSL’s philosophy of growing all its product segments and maintaining a well-balanced product portfolio," said Vivek Chaand Sehgal, chairman, Samvardhana Motherson Group.
MSSL, a JV between Samvardhana Motherson Group and Japan's Sumitomo Wiring Systems, is the largest supplier of electrical distribution system (EDS) to the Indian automotive industry, and has a presence in 25 countries.
Citigroup Global Markets Inc acted as the exclusive financial advisor to MSSL for this deal.
Prior to this, MSSL has made 10 acquisitions, the first being in wiring harness in 2002, and other noticeable ones being acquisition of mirror business from Visiocorp (now renamed as Samvardhana Motherson Reflectec) in 2009 and Peguform (now named Samvardhana Motherson Peguform) in 2011, which established MSSL as a global tier-I supplier to the major OEMs of the automotive industry.
Shares of MSSL were quoting at Rs 287.15 each, up 4.65 per cent on BSE in a weak Mumbai market in mid-day trades on Tuesday.
(Edited by Joby Puthuparampil Johnson)