Cos in Europe targeted; deal size seen around $200 m

The company was looking primarily in Germany, Italy, Spain and France with relatively less stringent labour laws.

Priyanka Vyas

New Delhi, Aug. 26 Mahindra’s & Mahindra’s auto components division is looking at more acquisitions in Europe. “We are looking at deals between $100 million- $200 million worth with five times of EBITDA as ideal for our business,” said Mr Hemant Luthra, President, Systech, automotive component division of M&M.

He said that the company was looking primarily in Germany, Italy, Spain and France with relatively less stringent labour laws.

“Unlike other companies like Bharat Forge or Amtek that have followed the strategy of buying loss making European companies and reviving them, Mahindra has been buying profitable companies with better margins at a much higher level.

Since they have been buying out aggressively since the last one and half year, it is believed to move at a slower pace this year, though it may look at one or two,” said Mr Amit Kasal of Motilal Oswal Securities Ltd.

Earlier, the company had acquired UK’s Stokes Forgings, Germany’s Jeco Holding AG and Schöneweiss GMBH.

“M&M is targeting its automotive division to touch $1 billion by 2010 from $650 million. With the acquisitions they have made so far, the company has been able to scale up but now the challenge lies in increasing the profitability of the companies that they have acquired.

This could be by shifting a part of production here in a way that it would complement their production facilities in those countries,” said a securities firm analyst from BKSI who did not want to be quoted.

The company automotive division includes Mahindra Sourcing, Mahindra Gears, Mahindra Forgings and supplies to OEMS like Tata Motors, GM and Ford amongst others.

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(This article was published in the Business Line print edition dated August 27, 2007)
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