Motherson Sumi goes for major rejig plan

Our Bureau New Delhi | Updated on July 03, 2020 Published on July 03, 2020

Workers assemble wire harnesses at the Motherson Sumi Systems Ltd (file photo)   -  Bloomberg

Says move will simplify group structure; benefit all shareholders

Major auto components manufacturer Motherson Sumi Systems (MSSL) on Thursday decided for a major reorganisation for its group companies, to simply group structure and benefit the shareholders.

The reorganisation plan approved by the respective boards of MSSL and Samvardhana Motherson International Ltd (SAMIL), among other things, entails demerger of Domestic Wiring Harness (DWH) business from MSSL into a new company which is in the process of being incorporated as a wholly-owned subsidiary of MSSL, and subsequent merger of SAMIL into MSSL (new company) to consolidate 100 per cent shareholding in Samvardhana Motherson Automotive Systems Group BV (SMRP BV) as well as to bring all auto component and allied businesses in SAMIL under MSSL, the company said in a statement.

“The reorganisation realigns interests of all its stakeholders and creates a simplified corporate structure for growth of businesses across product portfolios within auto components space and allied operations,” it said.

Shareholding pattern

In step one, the board has approved the demerger of DWH business of the company into the new company, which will eventually be listed, with mirror shareholding as that of the company. For every one share held in MSSL, one share of the new company would be allotted.

In step two, the board also approved the merger of SAMIL, the principal holding company of Motherson Group and promoter of MSSL, into MSSL. In this, for every 10 shares held in SAMIL (of face value ₹10 each), 51 shares of MSSL (of face value ₹Re.1 each) would be allotted

MSSL will be renamed as Samvardhana Motherson International Ltd, the company informed.

“The transaction is to be effected pursuant to a Composite Scheme of Amalgamation and Arrangement and is subject to receipt of regulatory and other approvals inter-alia from shareholders, creditors, NCLT etc, as may be applicable. The transaction is likely to be completed by second quarter of fiscal year 2022,” it said.

It also said the merger of SAMIL into MSSL is expected to be EPS-accretive in fiscal year 2022, the first year of the merger.

The company will now be taking necessary steps to give effect to the scheme, including regulatory approvals as required and approval of shareholders of the company, MSSL said.

“The simplification of group structure has been a long-standing request from our shareholders and the proposed reorganisation is a step in that direction. The transaction helps create strong business platforms under the Motherson umbrella which will enhance stakeholder value for the long term,” Vivek Chaand Sehgal, Chairman, MSSL said.

Axis Capital and DSP Merrill Lynch are acting as financial advisors and fairness opinion providers to the company and Kotak Investment Banking is acting as financial advisor and fairness opinion provider to SAMIL, it said.

Price Waterhouse & Co. LLP and BSR & Associates LLP have recommended the share entitlement ratio for the demerger and share exchange ratio for the merger to the board of directors of the company and SAMIL. AZB & Partners are the legal advisors to the Transaction, MSSL added.

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Published on July 03, 2020
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