Amtek Auto buys UK firm for $40 million

Amtek Auto buys UK firm for $40 million

Mumbai: Auto parts maker Amtek Auto Ltd said on Wednesday it had acquired UK-based rival Triplex-Ketlon Group, consolidating its precision machining operations into one of the largest in Europe.

Amtek paid $40 million (Rs157 crore) for the acquisition in an all-cash deal, finance director Santosh Singhi said. The acquisition will help bring considerable cost savings due to variable and fixed cost synergies.

“The forgings and castings will be sourced from domestic units in India, which should save 25-30% of the component cost," Singhi said.

He estimated additional revenue of $70-80 million yearly on this account, and annual cost savings of $16-18 million by the third year.

Triplex-Ketlon, which counts Land Rover Group Ltd, Ford Motor Co. and JCB among its customers, will give Amtek entry into high-value gear manufacturing segment, and also provide access to very high growth Japanese original equipment makers such as Toyota Motor Corp. and Honda Motor Co. in Europe.

“We will add many products like ladder frames and engine covers in our portfolio, and also add to market share," Singhi said.

The UK firm will also help Amtek add three manufacturing facilities in that country, in addition to its existing two facilities there.

Triplex-Ketlon’s products include engine and transmission covers, brake discs, gears, shafts and sprockets. All its current customer contracts are long term.

Triplex-Ketlon’s $152 million per annum sales will boost Amtek’s revenues in the UK alone to $650 million and overall international revenues to $770 million per annum.

Amtek has targeted crossing $1 billion per annum in international revenue within two years, but Singhi said the company could reach the milestone within six months through another acquisition in Europe.

“We are seriously looking at 3-4 proposals in the component making and auto space. These firms have revenue in the $100-300 million a year range," he said.

Amtek has been eyeing acquisitions in Europe to consolidate its presence there, and is also simultaneously setting up capacity in low-cost countries.

It bought assets of J.L.French (Witham) Ltd in June and, since 2001, has spent more than $150 million to buy 11 units in India and overseas. It is also setting up plants in China and Romania to take advantage of lower costs.

The company raised $250 million through five-year convertible bonds in May 2006, to fund acquisitions.

Amtek shares were trading at Rs450, down 0.2% in a firm Mumbai market.