M&M buys German co for Rs 830 cr

(Financial Express Via Thomson Dialog NewsEdge) Mahindra and Mahindra (M&M) Ltd on Thursday bought a 67.9% stake in German forging company Jeco Holdings, in a deal struck at an enterprise value of Rs 830 crore (140 million euros). M&M did not disclose the exact payout for the acquisition though it claimed it was the largest acquisition in the auto components sector. "The acquistion, to be done through Mahindra's Mauritian subsidiary, is the largest acquisition by an Indian company in the auto component manufacturing space," Systems and Technology (Systech) president Hemant Luthra said. Jeco, which has a capacity of one lakh tonne per annum and a turnover of 180 million euro, supplies major products including gear boxes, engine & axle pans, hubs, gears and piston heads to customers which include the DaimlerChrysler Group, ZE Group, MAN Nutzfahrzeuge, Volvo, Linde, Renault, Agco, Kessler and Kolbenschmidt. The stake, currently held by Mahindra, would be transferred to the recently relisted Mahindra Automotive and Steels Ltd (MASL), Luthra said. This is the third acquisition by the company within the space of a year. Earlier in January this year, M&M had acquired 98.6% of the shares in UK-based automotive forging company Stokes Group Ltd. Forging ahead

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Products Gear boxes, engine & axle pans, hubs, gears and piston heads Customers DaimlerChrysler Group, ZE Group, MAN Nutzfahrzeuge, Volvo, Linde, Renault, Agco, Kessler and Kolbenschmidt Capacity One lakh tonne per annum Turnover 180 million euro Just before that in December last year, Mahindra & Mahindra Ltd entered into an agreement with Plexion Technologies, Mauritius, a group Company of JP Morgan to acquire 88.41% of the fully diluted equity capital in Plexion Technologies (India) Ltd. The board of MASL would be reconstituted to accomodate members of Jeco, he said, adding that the debt of Jeco would get frozen as the German auto component manufacturer is not a highly leveraged company. The acquistion will help M&M service customers from three locations-UK, Germany and India for their auto component needs. With regard to the benefits accruing to the company as a result of the acquistion, Luthra said, "This transaction will result in us establishing a significant footprint in continental Europe."

Copyright 2006 The Indian Express Online Media Ltd.. Source: Financial Times Information Limited.