Peguform deal valued at Rs890 cr: Motherson Sumi

Peguform deal valued at Rs890 cr: Motherson Sumi

New Delhi /Mumbai: Auto parts maker Motherson Sumi Systems said on Monday its deal to buy a majority stake in Germany’s Peguform Group was valued at €141.5 million (about Rs890 crore) with the firm’s share being €72.17 million.

Motherson Sumi, the world’s largest maker of rear view mirrors, said last week it would buy a majority stake in German Peguform Group from Cross Industries , who would retain 20% holding.

The deal will be executed through a special purpose vehicle in which Motherson Sumi Systems will hold 51% and group firm Samvardhana Motherson Finance would hold 49%.

“The deal seems to be cheap, but we have to check whether this is the enterprise value and how much is the debt component," said a Mumbai-based sector analyst who declined to be named.

Last Wednesday, Motherson shares fell after it announced plans to acquire Pegufrom, as investors worried about the target company’s lower margins becoming a drag in the short-run.

However, on Monday, the shares, valued at about Rs9,200 crore, rose as much as 1.2% to Rs240. By 12:40 p.m., the shares were up 0.99% at Rs239.6.

Motherson said it will fund the deal through overseas loans and has appointed ICICI Bank as the lead arranger.

This is in contrast to the company’s plans till Wednesday, when its vice chairman Vivek Chaand Sehgal told reporters it will buy the debt-free company through loans tied up from Indian lenders.

The deal is expected to be closed by end-September, Motherson said in a statement on Monday.

Peguform makes and distributes bumper systems, plastic components for vehicle exteriors, cockpits, dashboards and vehicle interior trims.

Motherson Sumi makes a range of auto parts from rear-view mirrors to wiring harness and high-tension cords, serves Volkswagen, Ford , General Motors , Hyundai Motor and Maruti Suzuki among others.

Peguform has reported an EBITDA of €66.87 million in calendar 2010 and had sales of €1.37 billion.