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Auto component manufacturer Motherson Sumi Systems Ltd (MSSL) has entered into an agreement to acquire Stoneridge Inc’s wiring harness business for $65.7 million.
The acquisition is expected to close in the third quarter of 2014 and the acquired company has a turnover of nearly $300 million.
In a communication to the stock exchanges, Motherson Sumi said the deal would cover six manufacturing facilities that were located in Portland, Indiana in the US, Chihuahua, Saltillo and Monclova, all in Mexico and an engineering and administrative centre in Warren, Ohio, in US.
The company supplies wiring harness and assembled instrument panels mainly to commercial vehicles, agriculture equipment, material handling equipment and off-highway vehicle segments.
The acquired business would now have access to expertise of MSSL in the areas of wire harnesses, wires, wiring harness components, including connectors, terminals, protectors, fuse and relay boxes.
Motherson Sumi would further build upon the existing knowledge, technical expertise, and customer relationships that Stoneridge has in the region.
This acquisition will further strengthen the company's presence in North America where it has in the recent past, established wiring harness operations. This is by far the largest acquisition for the core business of wiring harnesses.
Previous acquisitions
Before this, MSSL has done 10 acquisitions, the first being in wiring harness in 2002, and other noticeable 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 Motherson as a global Tier-1 supplier to the major OEMs of the automotive industry.
"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," Vivek Chaand Sehgal, Chairman, Samvardhana Motherson Group, said.
Citigroup Global Markets Inc acted as the financial advisor for the transaction, he said.
Motherson Sumi Systems is a joint venture between Samvardhana Motherson Group and Sumitomo Wiring Systems of Japan.
Shares of MSSL were trading at Rs 294.20 (face value Re 1), up by Rs 11.40 or 4.14 per cent, on the BSE.
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