Sona Autocomp Holding Limited today said it has entered into an agreement with its long-standing technical and financial collaborator JTEKT Corporation, to sell its entire stake in Sona Koyo Steering SystemsBSE -2.90 % Limited (SKSSL) for Rs 419 crore.
The total consideration would aggregate to Rs 4,19.28 crore at a price of Rs 84.00 per share for 49,914,664 shares representing 25.12% stake in SKSSL.
SKSSL is a manufacturer of steering systems for passenger cars and utility vehicles in India. The company supplies steering assemblies to Maruti Suzuki, Toyota, Tata Motors, Mahindra & Mahindra, Honda, Renault-Nissan and Ford among others.
The deal values SKSSL at an enterprise value of Rs 1922.50 crore and represents a 10.1x multiple of SKSSL’s EBITDA for the last 12 months ended September 30, 2016. The share price of Rs 84.00 per share represents a premium of ~ 34% to the average closing price of SKSSL’s shares for last three months.
The transaction is subject to regulatory clearances by Competition Commission of India and certain other conditions mentioned in the agreement.
JTEKT Corporation has also made a public announcement to acquire an additional 51,672,877 shares through an open offer, representing an additional 26% of Sona Koyo’s existing share capital, at a price of Rs 84.00 per share aggregating to Rs 4,34.05 crore from the public shareholders of Sona KoyoBSE -2.90 %. Subject to receipt of approvals and completion of conditions mentioned in the agreement, the transaction is expected to close by the first quarter of the financial year 2017-18.
On completion of the transaction described above and in the event that the open offer is fully subscribed JTEKT Corporation would have increased its stake to 71.22% in the company from the current 20.10%.
Sunjay J Kapur and Sona Group nominee directors, Rani Kapur and Kiran Deshmukh, will step down from the Board of SKSSL upon closure of the transaction.
Sunjay Kapur said, “This transaction is a step in a transformational phase in Sona’s journey and now it allows us to focus our attention, investments and energiesBSE 0.93 % in our fast-growing precision forging business where we own the technology and have the potential to claim global market leadership.”
The transaction will also result in a partial exit for JM Financial Private Equity Fund, which made an investment in Sona Autocomp Holding Limited in 2007.
JM FinancialBSE 0.80 % Institutional Securities Limited acted as the sole financial advisor and Cyril Amarchand Mangaldas acted as the sole legal advisor to Sona Autocomp Holding Limited on this transaction.