Largest overseas takeover deal
In what is billed as one of the largest overseas takeover deals in the auto component sector clinched by southern corporate group, Coimbatore-based Sakthi Auto Component (SAC), a subsidiary of Sakthi Sugars, has acquired Intermet Europe, a group of companies, from Intermet International, US, for 95 million euro (Rs 532 crore). Intermet Europe, which owns and operates two plants in Germany and one in Portugal, is engaged in precision castings in ductile iron for the automotive industry, with an annual capacity of 1.65 lakh metric tons. SAC owns and operates two plants in India producing ductile and grey iron precision castings with a capacity of 60,000 metric tons. The acquisition was completed by raising 75 million Euro through the loan route and the balance via investment by its parent company and preference shares.Around 10-15 million euro has been invested by Sakthi Sugars. The combined entity, based in Germany, would be known as Sakthi Automotive Group, SAC chairman and managing director M Manickam said addressing through a video-conference from Germany on Monday. Mr Manickam said the good synergy in the business would help the group to access European markets, apart from benefitting from the transfer of technology and available manpower. "SAC would benefit through technology at a much higher level as they are at least 10 to 15 years ahead of us," he added. On how long SAC would continue to ride piggy-back on Sakthi Sugars, he said it had to attain a critical size in the global scale which would be one billion dollar.
"Right now, it is the 100% wholly subsidiary, which has been getting a monthly business of Rs 20 crore. In the coming year, while we are aiming for a Rs 300 crore business, Intermet Europe is expected to contribute 180 million euros (Rs 1,100 crore)," he added. Sakthi Automotive Group chief executive Laurence Vine-Chatterton said the Intermet Europe’s client list included TRW, PSA and Bosch. Intermet Europe, which is on profit track for two decades now, recorded a turnover of 165 million euro last year, with an EBITA at 13 million Euro. The closely-held company has projected 180 million euro for the current year. After 4-5 month-long negotiations, SAC has made the acquisition through an open auction, conducted by Rothschild, he said, not ruling out further acquisitions.
