Sona Group sells entire stake in Sona Koyo to Japanese partner2 min read . Updated: 02 Feb 2017, 11:26 AM IST
Sona Group sells its entire 25.12% equity holding in its flagship Sona Koyo Steering Systems to JTEKT Corp. for about Rs419.28 crore
Mumbai: Indian auto components maker Sona Group has agreed to sell its entire 25.12% equity holding in its flagship Sona Koyo Steering Systems Ltd (SKSSL) to JTEKT Corp. for about Rs419.28 crore, ending its 32-years old relationship with the Japanese partner, it said in a statement on Wednesday.
The deal was sealed at a price of Rs84 a share, valuing the joint venture company—a manufacturer of steering systems for passenger cars and utility vehicles in India—at about Rs1,922 crore.
While the deal represents a 10.1x multiple of SKSSL’s Ebitda for the last 12 months ended 30 September 2016, the share price of Rs84, represents a premium of 36% to the closing price of SKSSL’s shares as on 2 January, 30 days prior to the date of announcement, the statement said.
As part of the deal, Sunjay J. Kapur, chairman of Sona Koyo, and Sona Group nominee directors Rani Kapur and Kiran Deshmukh will step down from the board of Sona Koyo, once the deal is closed.
“This transaction is a step in a transformational phase in Sona’s journey and now it allows us to focus our attention, investments and energies in our fast growing Precision Forging business where we own the technology and have the potential to claim global market leadership," Kapur said.
This is the first strategic transaction by the Sona Group under the leadership of Kapur who took over the reins of the group after the sudden demise of its founder Surinder Kapur in 2015.
Meanwhile, the Japanese firm has also made a public announcement to acquire an additional 26% of Sona Koyo’s existing share capital, at a price of Rs84 per share, aggregating to Rs434 crore through an open offer from the public shareholders of Sona Koyo.
Once the deal is completed and if the open offer is fully subscribed, JTEKT Corp.’s holding in Sona Koyo will increase to 71.22% from the current 20.10%. The transaction also marks second split between long-term Indian and Japanese partners in the automotive segment after Hero Group and Honda, the world’s largest manufacturer of two wheelers, parted ways in 2010.
Sona Koyo, the flagship company of the Sona Group, is one of the largest manufacturers of steering systems for passenger cars and utility vehicle market in India. It supplies steering assemblies to Maruti Suzuki and several global automakers, including Toyota, Tata Motors, Mahindra & Mahindra, Honda, Renault Nissan and Ford.
Further, the company said that the group, in the last few months, has announced several plans such as customer acquisitions in the electric vehicles space and opening of new facilities to strengthen the manufacturing capabilities of Sona BLW Precision Forgings Ltd, the other significant group company.
JM Financial Institutional Securities Ltd acted as the sole financial adviser and Cyril Amarchand Mangaldas acted as the sole legal adviser to Sona group on this transaction. On the other side, Kotak Investment Banking and SMBC Nikko acted as exclusive financial advisers to JTEKT Corp, while Kotak Investment Banking is also the manager to the open offer being made by JTEKT Corp.