India: Motherson Sumi offers up to $610m to acquire Finland’s PKC

Employees of Motherson Sumi Systems Limited, work on a car wiring assembly line inside a factory in Noida on the outskirts of New Delhi, India April 28, 2016. REUTERS/Anindito Mukherjee

Motherson Sumi Systems Ltd., India’s biggest auto component maker, has offered as much as 571 million euros ($610 million) to acquire a Finland-based parts manufacturer to expand its presence in the global market for wiring harness used in commercial vehicles.

The Indian company will make a public tender offer of 23.55 euros a share of PKC Group, Motherson Sumi said in a statement. That’s a 51 percent premium over PKC’s closing stock price on Thursday. The acquisition is expected to be completed by the end of March, it said.

Motherson Sumi said it will gain access to PKC’s presence in the U.S. and European commercial vehicle market through the combination of the two companies’ wiring harness business. The Indian component manufacturer will in turn help the company expand in the Asia Pacific region.

The purchase will at least double the Indian component maker’s wiring harness business and there will be “minimal overlap between the existing operations,” G.N. Gauba, chief financial officer of Motherson Sumi, said in a telephone interview Friday without providing details. The acquisition will be funded by internal accruals and existing lines of debt from banks, he said.

Motherson Sumi had 59.4 billion rupees ($872 million) in cash and cash equivalents as of Sept. 30, according to data compiled by Bloomberg.

Shares of Motherson Sumi rose 3.4 percent to 336.70 rupees as of 12:01 p.m. in Mumbai trading. They have climbed 33 percent in the past 12 months, compared with a 13 percent gain in the benchmark S&P BSE Sensex.

Motherson Sumi has appointed Motilal Oswal Investment Advisors Pvt. and Nordea Corporate & Investment Banking as financial advisers and White & Case as legal adviser for the tender offer. Bank of America Corp. is advising PKC on the tender offer.

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Bloomberg