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    Motherson Sumi likely to foray into railways segment through PKC acquisition

    Synopsis

    PKC has over 20 manufacturing facilities across Russia, Lithuania, Serbia, Poland, Estonia, Finland, China, United States, Brazil and Mexico.

    ET Bureau
    NEW DELHI: Auto components major Motherson Sumi Systems Ltd (MSSL) on Monday said it completed the acquisition of Finnish wiring harness maker PKC Group Plc for € 571 million (about Rs 4,150 crore) that could open opportunities for the company to be part of the modernisation of Indian railways.

    “This acquisition will give us presence for the first time in the rolling stocks segment. PKC has clients internationally, who are interested in the modernisation programme of the Indian railways. It opens up opportunities to venture in to the space in future,” Pankaj Mital, chief operating officer, MSSL, said.

    “We are very happy to announce that we have successfully acquired 93.75%* shareholding in PKC Group which has significant market presence in the American and European markets with major growth plans in China. This is in sync with our declared policy of focusing on these markets to create enhanced value for all our stakeholders including investors,” said the company’s chairman Vivek Chaand Sehgal.

    PKC has 20 manufacturing facilities across Russia, Lithuania, Serbia, Poland, Estonia, Finland, China, United States, Brazil and Mexico.

    “The wiring harness business registered revenues of around €800-900 million in the last financial year. The turnover from this segment will more than double post the completion of this acquisition,” said MSSL’s chief financial officer GN Gauba.

    Image article boday


    As per preliminary estimates PKC Group clocked revenue of €846 million in 2016.

    The MSSL- PKC Group marriage is expected to be value accretive since there is minimal overlap between their existing operations in terms of geographical presence and synergies in product segments. This is the 16th acquisition by Motherson Sumi since 2002.

    The company has set a target of achieving turnover of $18 billion by 2020 through global expansion.

    “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 terms of clientele.”

    Image article boday


    Headquartered in Helsinki, PKC Group is a tier 1 global supplier of wiring harness and associated components to makers of heavy and medium duty commercial vehicles and locomotive segments across North America, Europe, Brazil and China.

    Earlier this year, MSSL and PKC said the companies have sealed an agreement pursuant to which MSSL made a public offer for the acquisition of all the issued and outstanding share capital and voting rights of PKC Group.

    The tender offer was launched on 6 February. Shareholders of PKC were offered euro 23.55 per share.

    The company was valued at €571 million, MSSL said. The company has also obtained all pre-closing regulatory approvals for the transaction prior to completion of the offer.


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