Chennai, Dec. 26
SUNDRAM Fasteners Ltd on Monday formally announced the acquisition of 100 per cent stake in Peiner Umformtechnik GmbH, Germany, from its owners, Textron Deutschland Beteiligungs GmbH, a group company of Textron, USA.
At a press conference here, Sundram Fasteners' Chairman and Managing Director, Mr Suresh Krishna, called the acquisition "one more step in Sundram Fasteners' quest for globalisation."
The consideration for the takeover is being worked out and will be "based on a formula agreed upon with Textron and would depend on the value of assets of Peiner as on December 31," says a press release from Sundram Fasteners.
When questioned about the price of the acquisition, Mr Suresh Krishna said that the acquisition was at a "fairly reasonable price."
The acquisition has two distinct features of interest. First, it brings in a portfolio of customers to Sundram Fasteners. For example, Peiner supplies to Renault, France, a country into which Sundram Fasteners has not been able to make any headway so far.
Answering a question, Mr Suresh Krishna said all of Peiner's customers are willing to continue to buying from the company, even after change in ownership. Peiner's customers include DaimlerChrysler, BPW, DAF Trucks and Reyher besides Textron. Peiner's products were also sold through a strong network of distributors and its brand name was well recognised across Europe. It employed around 325 people.
Secondly, Peiner is also into construction fasteners. Therefore, with the acquisition Sundram Fastners enters the area of construction fasteners.
Answering a question, Mr Suresh Krishna said Sundram Fasteners could invest in construction fasteners in India also.
Also, Peiner's turnover of about Rs 250 crore, which is 20-25 per cent of Sundram Fasteners' sales, will be a significant addition to Sundram Fasteners' consolidated accounts.
Mr Suresh Krishna said that status quo would continue at Peiner. Sundram Fasteners does not intend to shift any part of the production into India. However, over time, if there are products that Peiner is not able to produce competitively, Sundram Fasteners would make them in India and "funnel them through Peiner."
The all-cash acquisition would be funded by internal accruals.
Sundram Fasteners, he said, hopes that access to Peiner's customers would also help in increasing the export of its products manufactured in India, including fasteners not manufactured by Peiner.
The company would also be able to gain access to retail market through Peiner's distributor network.