Mumbai, Aug. 18
TATA Technologies Ltd (TTL), through its subsidiary Tata Technologies Inc USA, intends to acquire a UK-based company for £53.40 million (Rs 416 crore). TTL is 94.31 per cent owned by Tata Motors Ltd and the automobile major is expected to advance the initial funds required for the move.
TTL informed on Thursday that it would be making a cash offer at 220 pence (Rs 169.40) per share for 100 per cent equity shareholding in INCAT International Plc. The latter is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and TTL's offer price represented a 4 per cent premium on INCAT's closing price of 211.5 pence per share on Wednesday.
"The board of INCAT has approved and recommended acceptance of this offer to its shareholders," TTL's statement said. Both companies provide engineering and design services and PLM (product lifecycle management) products and services, primarily to manufacturers/suppliers in the global automotive, aerospace and engineering markets.
According to it, the offshore capabilities of TTL in the field of engineering automation services combined with the high-end onshore strengths of INCAT was expected to offer a strong and seamless onshore/offshore delivery capability to customers. TTL's customers included Tata Motors, DaimlerChrysler, Ford, GM and Airbus, while INCAT's spanned DaimlerChrysler, Ford, Lotus, Grumman, Honda, Magna, Steyr and Boeing.
"The prospect of INCAT joining forces with TTL represents an exciting opportunity to advance our strategic aims. We are experiencing strong organic growth, which we wish to complement with suitably targeted acquisitions. INCAT's broad geographic platform and extensive customer base represents an accelerated route to achieve our targets. We believe that the enlarged group will be a major player in the engineering and design services market on a global basis," according to Mr Patrick McGoldrick, CEO, TTL.
For the year ended March 2005, TTL had a PAT of Rs 7.72 crore on a consolidated turnover of Rs 180.43 crore. It is understood that Tata Motors would advance the full funds required for acquisition as loan. TTL would later arrange for its own funds, believed to be Rs 200 crore from internal accruals as equity contribution and another Rs 245 crore raised through external loans.
INCAT, with 650 employees and customers in North America, Europe and Asia-Pacific, had an operating profit of roughly Rs 18.65 crore on a turnover of Rs 507.32 crore for its year ended August 31, 2004.
"The acquisition will give TTL greater scale and stronger positions in North America, Europe and Asia. This greater global scale will extend the reach of the enlarged group allowing it to offer a greater range of services to its global customer base," the statement said.
"Tata Technologies is a complementary business to our own and the enlarged group should benefit from the greater financial resources and presence, which being a part of the Tata Group will bring to its future development,'' said Dr Ross Bunce, Chairman, INCAT.