The Economic Times: April, 2015
New Delhi: Amtek Auto, one of India's largest auto component makers, is expected to announce as early as this week a deal to buy the iron casting, forging and machining business of Asahi Tec Corporation of Japan, executives with knowledge of the matter said.
The acquisition, which will be Amtek's 21st, will catapult the company as one of the largest global players of forging business and offer it an entry into China, the world largest automotive market. Amtek Group Global Chief Executive John Flintham confirmed the move, and said the acquisition will expand the company's global manufacturing presence and help it enter Southeast Asia.
He didn't give further details on the deal. Amtek will acquire the business from Japanese private-equity firm Unison Capital, which owns Asahi Tec. The executives who spoke to ET didn't disclose the likely valuation, but said the acquisition will be financed by a combination of internal accruals and debt. Japan's Sumitomo Mitsui Banking Corporation has been roped in to financing part of the debt.
The operations that Amtek Auto is buying have a turnover of $375 million (Rs 2,385 crore) and 1,500 employees across three manufacturing facilities in Japan, two in Thailand and a strategic holding in a joint venture in China, according to Asahi Tec's website. The New Delhi-based Amtek Group with $2.7 billion in annual revenue has grown quickly through acquisitions.
The manufacturing facilities and technical expertise it is expected to get through the Asahi Tec deal will add to the capacities it has created in the automotive businesses.
The product portfolio of the business it is acquiring - such as iron casting, forging and the machining business - is highly synergistic to that of the Amtek Group, said one of the people.
Asahi Tec's key products include cylinder blocks, crankshafts, front axle beams, cylinder heads, turbocharger housings and other engine and suspension related components.
"Access to highly advanced technologies for front axle beams and crankshafts will be complementary to (Amtek unit) Ahmednagar Forgings' existing businesses," this person said.
"In addition, the high-end technology and manufacturing capabilities for block and head castings will be synergistic with (another subsidiary) Amtek India's casting operations." The deal would bring multiple blue-chip global companies including Caterpillar, Hino Motors, Mitsubishi Fuso, Mitsubishi Heavy Industries and Mitsubishi Motors to Amtek's customer portfolio.
Following the proposed transaction, the group's revenue opportunities from the commercial vehicle and construction equipment segments are expected to expand. It would also further strengthen Amtek Auto's position in the attractive high growth turbocharger market.
"We are always looking to expand the geographic footprint and customer base in the pursuit for world class casting and forging technologies to strengthen our position as one of the world's most technically advanced automotive component manufacturers," Amtek Group CEO Flintham said. Amtek, which manages around 70 production facilities across several countries, is consolidating its business with the core focus into the forging and casting businesses and had acquired a majority stake in JMT Auto to have edge in the Indian market.