Business Standard: January 20, 2017
Mumbai: Auto component major Motherson Sumi Systems Ltd (MSSL) has signed an agreement to acquire Finnish wiring harness maker PKC Group Pic for € 571 million (about Rs 4150 crores).
Helsinki-headquartered 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 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 stock manufacturers.
The Finnish firm has a market leading presence in the wiring harnesses for commercial vehicles in the North America and Europe markets. Apart from these geographies, PKC has a significant presence in Brazil and a growing presence in China. PKC had over 22,000 employees and estimated revenue of approximately € 846 million in 2016.
The proposed acquisition of PKC will support MSSL to expand 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. On the other hand, MSSL will help PKC to execute its expansion plans in Asia Pacific region which is a highly attractive market for all the leading global commercial vehicle manufacturers and component suppliers as they 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,” said Motherson Sumi Systems in a press release.
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.
“Wiring harnesses are ever more important to the products of our customers and hold a special place within our hearts at MSSL, because it is our company's genesis. The prospect of two global teams coming together and the synergies that will be brought about, is very exciting to us. It will allow us to create huge value for our customers and to service our customers in additional locations in the world,” said Vivek Chaand Sehgal, chairman, Motherson Sumi Systems.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.