Automobile parts manufacturer, Motherson Sumi Systems Ltd, through one of its European subsidiary Samvardhana Motherson Automotive Systems Group BV (SMRPBV) has announced the acquisition of a majority stake in Plast Met Kalip (Istanbul) and Plast Met Plastik, Bursa together known as Plast Met Group (Turkey).
In fact, SMR will acquire 75% stake all for cash consideration and will enter a partnership with the founder of Plast Met, which reported combined revenues of 33.4 million Euro in 2019 and estimated 28 million Euro last year. Erol Senol, the founder of Plast Met will retain 25% stake in the companies and will continue to drive further business growth as a partner with SMR. Motherson Sumi expects these acquisitions to close within three months subject to receipt of necessary approvals. Consideration will be based on enterprise value of Euro 21.78 million subject to certain agreed adjustment.
The acquisitions come at a time when the automobile industry across the world and even in India has slowed down because of the Covid-19 pandemic. As Motherson Sumi has a good track record of buying companies and turning it, lots of good companies with scale are up for sale globally because of the pandemic. So, acquiring the right company is key to growth once the pandemic subsides.
Turkey is a strategic growth market
This acquisition will mark Motherson Group’s entry into Turkey through SMR. Turkey is a strategic growth market for the Motherson Group, with annual passenger vehicle production of 1.4 million units and long-term growth potential. For Motherson, entry into Turkey is consistent with the geographic expansion opportunities highlighted in the company’s Vision 2025 strategy. The buyouts are a part of the company’s vision of tripling revenues by FY25 to $36 billion from $12 billion under the Vision 2025 strategy. If that is achieved, then Motherson will be among the world’s top five auto component suppliers in terms of revenue. Moreover, around 80% of Motherson’s targeted consolidated revenue over the next five years will come through acquisitions and as part of Vision 2025, Motherson Sumi Systems will be expanding into new divisions like medical, aerospace, logistics and IT (Information Technology).
Turkey is likely to play a key role as a competitive sourcing hub and as a platform to serve the Group’s customers in European region. The acquisition will provide Motherson with diversification opportunities aligned with its core competencies and give competitive capacity expansion in Europe. The transaction will also enhance Motherson Group’s tooling capabilities and complement its existing manufacturing footprint as Plas Met is engaged in the manufacturing injection moulded parts, sub-assemblies for mirrors, trim modules, and lighting systems. The acquisition will help in addition of capacities for in-house tooling in Europe and increased ability for prototyping and securing short lead time programmes. It will reduce dependence on specialized tool makers and enhance competitiveness.
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