MUMBAI: Mahindra CIE Automotive agreed to acquire automotive forging company Bill Forge in a Rs 1,332 crore cash and stock deal, which the Indo-Spanish component maker expects will help diversify its business and increase revenue and profit from Asian markets.
Under the deal, Mahindra CIE will fund about half the acquisition cost through internal cash accrual, and allot 31.99 million shares on a preferential basis to shareholders of Bengaluru-based Bill Forge at Rs 200 each. The company will also issue 22.5 million shares to PIA2, a subsidiary of CIE at the same price to ensure that the stake of CIE in Mahindra CIE doesn’t fall below 51%, reposing faith of the Spanish industrial group in the Indian JV.
Post takeover, the share of CIE subsidiary PIA in Mahindra CIE will be 51.39%, while that of Mahindra Group unit MVML will reduce to 17.26%. Current promoters of Bill Forge will get an 8.46% stake.
The Mahindra CIE board has separately decided to raise Rs 700 crore through public or private placement of equity, convertible debt or other equity-linked securities to clean up the balance sheet, in order to be ready for new opportunities.
Bill Forge, promoted by first generation entrepreneur Anil Haridass, was under the radar of Mahindra CIE, even before Manish Kejriwal-led PE firm Kedaara Capital invested it in 2015.
Mahindra CIE had considered merging Bill Forge with the company but decided against it as the merger would have entailed a lengthy legal process and frozen their capital structure for at least a year.
Acquisition of Bill Forge is complementary and both companies share a strong geographical, product and culture fit, said Mahindra CIE Chairman Hemant Luthra.
“The optimisation is behind us or we can say we are well on our way to faster growth,” Luthra told ET.
After CIE came on board, Mahindra CIE got into optimisation mode, focusing on controlling capex, reducing debt and looking at ways of turning around European operation. The acquisition of Bill Forge indicates Mahindra CIE is just starting its expansion phase.
The acquisition will substantially increase revenue and profitability from Asian markets for CIE, and further reinforce Mahindra’s forging capability.
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Source: Economic Times
