The Hindu Business Line : Sakthi Auto buys Intermet Europe for Rs 533 crore

Chennai April 30 Sakthi Auto Component Ltd, a subsidiary of Sakthi Sugars Ltd, has acquired Intermet Europe, an auto components manufacturer, through a $130-million (Rs 533 crore) deal.

Intermet Europe, a part of Intermet International, USA, owns two plants in Germany and one in Portugal making precision castings in ductile iron for the automotive industry. It is a 165 million (Rs 922 crore) company with an annual production capacity of 165,000 tonnes.

Mr M. Manickam, Chairman and Managing Director, Sakthi Auto Components Ltd, who addressed a videoconference from Saarbrucken, Germany, said that following the acquisition, the combined entity would be known as Sakthi Automotive Group (SAG). The group will be headquartered in Germany.

Sakthi Auto Components, a Rs 170-crore company, operates two plants in India for making ductile and grey iron castings with a capacity of 60,000 tonnes.

With the European company being the larger and technologically more advanced player, SAG would be managed from Germany, he said. On the details of the acquisition, Mr Manickam said that $75 million was through loans.

The other $55 million was raised through convertible preference shares with Sakthi Sugars subscribing to $10 million preferential equity and other Indian investors putting in $40 million. Sakthi Sugars has also loaned $5 million, he said.

The combined entity would grow in Europe and Asia.

The Indian operations would gain technologically over the next two years. The European company would gain from a wider product base and some of the machining would be done in India.Intermet Europe makes car disc brake parts, control arms, differential cases, bearing caps and rear axle housing. Sakthi Auto has a 85 per cent market share for steering knuckles in India and is also an exporter. SAG products would come under the Sakthi brand.

Sakthi Sugars, a Rs 2,400-crore company with an eighth of the business from auto components, would grow to more than Rs 3,000-crore with 50 per cent of its business coming auto components. SAG, the combined entity would grow at over 10 per cent annually, Mr Manickam said.

More Stories on : Mergers & Acquisitions | Automobile Components

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