Vivek Chaand Sehgal’s Motherson Group is in an advanced stage of talks to acquire Marelli, the Italian auto components maker owned by private equity firm KKR, in what would be the Indian company’s biggest acquisition to date, people aware of the matter said.
A deal is likely to be announced by the end of May or early June, the people said, asking not to be named. They also did not reveal any likely financial terms or how the Motherson Group will fund the deal.
The acquisition, if consummated, will propel the group, India’s largest automobile component manufacturer, to be among the global top-ten in the segment.
Emails to the Motherson Group and Marelli seeking comment didn’t elicit any response till press time Monday.
Marelli had posted revenue of more than $11 billion in 2021, almost the same as the Motherson Group.
Acquisitions have contributed significantly to Motherson Group’s growth. It has made 29 acquisitions to date, five of which, including in China, Mexico and Turkey, since the beginning of the pandemic. It is currently in talks for acquiring six more companies, according to the people. The deals are part of its plans to take the group turnover to $36 billion by 2025.
Marelli was created in 2019, after KKR merged Calsonic Kansei, which it acquired from Nissan for $7.1 billion in 2017, with Magneti Marelli.
In March 2022, the company, with total liabilities of $8.2 billion, went for a debt restructuring and settlement. This is not the first time Motherson Group has put in a bid for a company that is larger than it. Several of the deals were for financially struggling companies, which it acquired and then turned around.
The Motherson Group had a long relationship with Magneti Marelli and Calsonic Kansei, as it had joint ventures with both to produce suspension, automotive lighting, and HVAC systems in India.
The Motherson Group has undergone a restructuring and has created verticals under the wiring business and automotive lighting business. It is also diversifying into nonautomotive businesses, including aerospace, logistics and healthcare, from where it aims to generate revenue of $9 billion by 2025.
Of the six other companies it is in talks with, the auto parts maker is very close to acquiring a tooling company, the people said. It is also planning to create a new entity for the polymer business.
The group had missed its five-year target of achieving revenue of $19 billion in 2020.
“We took a step back looking at the situation and we hope that we will be able to recover some part of it in the current five-year plan,” Sehgal told ET during an earlier interaction.