Auto parts maker Samvardhana Motherson International (SAMIL) announced on July 4 that it will buy a majority stake of 81 per cent in Japan-based auto-part maker Yachiyo Industry’s four-wheeler (4W) business – a subsidiary of Honda Motor. The transaction is valued at 22.9 billion Japanese yen ($158.54 million), said SAMIL in a regulatory filing to the stock exchanges on Tuesday.
Honda currently owns a 50.4 per cent stake in Yachiyo and the rest is owned by the public. As part of the transaction, Honda will first buy out the entire public stake in Yachiyo via a tender offer and retain Yachiyo’s two-wheeler (2W) business (housed under Goshi Giken). SAMIL will acquire an 81 per cent stake in Yachiyo’s 4W business, while Honda will have a 19 per cent stake.
‘’The company has entered into a partnership with Honda Motor under which it will form an 81:19 strategic partnership with the latter where both partners will drive the company towards a strong and sustainable future and be fully prepared for next-generation products and technologies, said SAMIL.
The acquisition requires approval from authorities in China, Brazil, United States, as well as the Reserve Bank of India, said SAMIL in the exchange filing.
Yachiyo Industry Co Ltd – a publicly listed firm on the Tokyo Stock Exchange, has 4W and 2W businesses. It makes automobile parts like sunroofs, fuel tanks, and resin products. Yachiyo’s business has a book value of 59.2 billion yen as of March 31, reported revenue of about 116 billion yen and earnings before interest, taxes, depreciation, and amortization of 13 billion yen, according to SAMIL’s statement.
The company’s 4W business has developed multiple value-added next-generation products such as lighter plastic tailgates and type-IV hydrogen storage tanks. The 4W business employs about 3,200 people in manufacturing, research and development centers across eight countries including the US, Brazil, Mexico, China, Japan, Thailand, Indonesia and India.
The acquisition will provide access to research and development (R&D) capabilities for SAMIL and foray into the global sunroof market, as per the statement. The deal with likely enable SAMIL to offer its existing products and enter into other segments with Honda Motor and will also strengthen its presence in Japan, according to the statement.
As a worldwide strategic supplier to Honda Motor with a fully aligned footprint, Yachiyo 4W supports Honda Motor in all of its sunroof and fuel tank requirements at each manufacturing location. The sunroof systems have high growth potential globally due to an increase in demand and are expected to see a surge in application across all car segments, said SAMIL.
The transition to hybrid will continue to see the use of plastic fuel tanks. The trend of fuel cell powertrain is also aligned with type-IV hydrogen storage tank under the advance stages of development, according to SAMIL.
The transaction enables further diversification for Motherson in line with its 3CX10 strategy along with opportunities for the company to offer these products to other original equipment manufacturers (OEMs) across the globe.
“These new product segments are in line with our increasing content per car strategy as well as our customer-centric approach. We believe this business will be highly synergistic with Motherson’s existing portfolio as we see ample opportunities to grow this new business globally by leveraging our global relationships with auto original equipment manufacturers,” said Vivek Chaand Sehgal, Chairman, Motherson.
