Automotive parts manufacturer Motherson Sumi Systems Ltd (MSSL) has signed a strategic agreement to acquire the electrical wiring interconnection systems (EWIS) business of Bombardier Transportation, the rail equipment division of Bombardier Inc.
In a statement, Noida-based MSSL said it will acquire the Huehuetoca, Mexico-based arm via its local subsidiary, Motherson Rolling Stocks S. de R.L. de C.V. (MRS).
This unit is involved in the design and manufacture of electrical cabinets, power packs, and electrical distribution systems for rolling stock manufacturers.
This acquisition involves assets, employees and inventories transfers on a debt- and cash-free basis, at a valuation of around $10 million (Rs 73.46 crore at current exchange rates).
The acquisition will help MRS enhance the efficiency of its manufacturing processes with respect to factors such as time-to-market, on-time deliveries, and cost structures. “Our focus is always on adding value to our customers' supply chain and catering to their requirements,” MSSL chairman Vivek Chaand Sehgal said.
The EWIS unit generated $25 million in revenue for the 2019 calendar year, MSSL said. It expects the acquisition to close by the fourth quarter of the 2020-21 financial year, subject to customary conditions.
“The transaction is beneficial to both parties since Bombardier has been seeking to establish a long-term supplier partnership for electrical harnesses and assemblies in the Americas region and MRS is an excellent strategic partner for this,” Bombardier Transportation Americas region president Elliot G Sander added.
This is the latest transaction between the two as part of a larger partnership. In March last year, MSSL said it would acquire Bombardier Transportation (Rolling Stock) UK Ltd’s assets used to produce and install electrical components and systems for the rail industry. At the time, the company said it would pay GBP 10.87 million (around Rs 102 crore) for the acquisition.
Other acquisitions MSSL has made in the past couple of years include the Netherlands-based Reydel Automotive Group for $201 million (Rs 1,307 crore) in April 2018 from the United States-based alternative investment firm Cerberus Capital Management.
In January 2018, group company Samvardhana Motherson International Ltd acquired MS Global India Automotive Pvt. Ltd from South Korea-based MS Group.
Shares of MSSL were trading 0.78% down at Rs 108.35 apiece at the time of writing this report. The company reported consolidated net sales of Rs 63,536.87 crore for the 2019-20 financial year, with profits-after-tax of Rs 1,294.44 crore for the same period.