Motherson Sumi Offers Up to $610 Million to Acquire PKC

  • Indian parts maker to make tender offer of EU23.55/share
  • Company expects to complete acquistion by end of March

Motherson Sumi Systems Ltd., India’s biggest auto component maker, offered as much as 571 million euros ($610 million) for 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 Oyj, 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 Finnish company expand in the Asia Pacific region.

The purchase will at least double Motherson’s wiring harness business and there will be “minimal overlap between the existing operations,” Chief Financial Officer G.N. Gauba said in a phone 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 PKC jumped 49 percent to 23.29 euros at 10:03 a.m. in Helsinki. Motherson Sumi rose 2.1 percent to 332.60 rupees in Mumbai. It has 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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