Leading global auto components
major Motherson Sumi Systems Ltd (MSSL) controlled by Vivek Chaand Sehgal has
announced plans to acquire PKC Group Plc of Finland for around Euros 571
million (approximately Rs 4160 crore). Headquartered in Helsinki, Finland, PKC
is a global tier 1 supplier of wiring harness and associated components to
Original Equipment Manufacturers (OEMs) in the Heavy & Medium Duty
Commercial Vehicles and Locomotive segments across North America, Europe,
Brazil and China.
PKC had over 22,000 employees
and estimated revenue of approximately Euros 846 million (Rs 6163 crore
approx.) for the 2016.
In a press release, MSSL
announced that it has launched a voluntary recommended public tender offer for
acquisition of the entire outstanding share capital and voting rights of PKC
Group Plc. MSSL and PKC have on January 19, 2017 entered into a combination
agreement for the proposed transaction. MSSL will make a voluntary, recommended
public tender offer to acquire all the issued and outstanding shares and option
rights in PKC. The shares of PKC are currently listed on the Nasdaq Helsinki
PKC shareholders are being
offered a cash consideration of Euros 23.55 for each share/options in PKC
representing an aggregate equity purchase price of approximately Euros 571
million in an open tender offer. The transaction is expected to be completed by
end of March 2017. The acquisition will be made through a 100% subsidiary of
MSSL, to be setup for the purpose
PKC established its first
wiring harness factory in 1969, and is a trusted and acknowledged partner in
the global commercial vehicle industry. PKC designs, manufactures and
integrates tailored electrical distribution systems and related architecture
components, vehicle electronics, wires and cables especially for trucks and
buses, light and recreational vehicles, construction equipment and agricultural
and forestry equipment. In addition, PKC designs and manufactures electrical
cabinets, power packs and electrical distribution systems for leading rolling
Rationale for the Acquisition
The proposed acquisition of
PKC supports MSSL in expanding its presence in the niche market of global
wiring harness business for commercial vehicles. The combination is expected to
be highly value accretive as there is minimal overlap between their existing
operations in terms of geographical presence and great synergies in product
segments which will unlock the true potential of the combined entity. PKC has a
strong presence in American & European wiring harness market for commercial
vehicle segment which will provide new opportunities for MSSL to grow in these
geographies. This will be in line with MSSL’s stated Vision 2020. MSSL also
believes it can help PKC in achieving its expansion opportunities given MSSL’s
strong market position in the Asia Pacific region which is a highly attractive
market for almost all leading commercial vehicle manufacturers.
Based on the analysis of MSSL, all the leading
global commercial vehicle manufacturers and component suppliers are
increasingly focused on establishing a presence and gaining market share in the
Asian transportation market. MSSL had stated direction to grow more in the
commercial vehicle segment and this step is in the right direction. Leveraging
these opportunities and the capabilities, the combined company will accelerate
growth and profitability improvement. By offering a larger product portfolio as
well as enhanced capabilities and scale, the combined entity will add more
value to its customers and suppliers.
MSSL’s success in managing
wiring harness business with focus on training its’ people, managing multiple
plants with high degree of vertical integration from design to modules will
help unlock the potential of PKC. It would leverage knowhow of both companies’
management teams to enhance and grow businesses with customers globally. While
supporting PKC to accomplish its expansion opportunities, the combined entity
will further invest in new technologies which would be required to maintain
market leadership and in achieving its goal as the preferred solutions provider
for the global automotive industry.
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