Murugappa Group’s abrasives and industrial ceramics maker Carborundum Universal Ltd (CUMI) has entered into an agreement with the Insolvency Administrator of Germany-based Awuko Abrasives Wandmacher GmbH, a 120-year-old leading brand in coated abrasives business, to buy the latter's main assets.

The estimated purchase price is €6.01 million.

CUMI GmbH, Germany, a step -down subsidiary of CUMI, signed an asset purchase agreement with the Insolvency Administrator on Wednesday as CUMI emerged as the successful bidder in a competitive bidding process for the assets of Awuko which includes land & building, plant & machinery, fixed assets, leased assets, brands & trademarks, patents, technical know-how and other intangible assets but excludes cash and receivables, according to a statement.

Expansion plans

“Acquiring the assets of Awuko fits in well with CUMI’s expansion plans in Europe. CUMI will gain access to the coated abrasives capacity of 10 million sq metres, global distribution base and an experienced process & application engineering team. Significant cross learning is possible as CUMI also operates two coated abrasive makers in India,” said N Ananthaseshan, Managing Director of CUMI.

The asset purchase deal will be subject to completion of negotiations with the Works Council in connection with rightsizing of employees as well as agreements with the lessors/creditors of Awuko.

Also, CUMI will be able to provide critical raw materials to Awuko from its operations in India and Russia.

"With our expertise and experience in turning around the performance of stressed assets we intend to enhance our international offerings in coated abrasive products. CUMI will benefit with the access to varied technology and leveraging opportunity for each other’s brands," said Sridharan Rangarajan, Director Finance and Strategy of CUMI.

Awuko is a market leader in leather and wood applications with strong presence in metal and lacquer applications. The acquisition is in line with CUMI’s aggressive inorganic growth plans, he added.