Samvardhana Motherson International Ltd to Acquire Atsumitec Co., Ltd. in Strategic Acquisition Deal

On December 6, 2024, Samvardhana Motherson International Limited (SAMIL) announced a significant acquisition deal involving Atsumitec Co., Ltd., a prominent Japanese manufacturer specializing in high-precision machined components for the automotive industry. This move is set to expand Motherson’s presence in key automotive markets and bolster its global manufacturing capabilities.

1. Acquisition Overview

• Acquired Entity: Atsumitec Co., Ltd.

  • Industry: Automotive (specializing in high-precision machined components for 4W and 2W vehicles).
  • Business Focus: Atsumitec manufactures components like gear shifters, chassis, and transmission parts for both four-wheeler (4W) and two-wheeler (2W) segments.
  • Revenue: Atsumitec reported a turnover of approximately JPY 62 billion (~USD 412 million) for FY 2023-24.

• Acquisition Structure:
  Samvardhana Motherson will acquire 95% of Atsumitec’s voting shares through its 100% subsidiary SMRP B.V. The remaining 5% voting rights will be retained by Honda Motor to ensure a smooth business transition. This acquisition will proceed in multiple steps, culminating in the final ownership structure by Q1FY26.

2. Strategic Objectives Behind the Acquisition

The primary reasons for this acquisition include:

• Expansion of Business with Japanese OEMs: Motherson aims to strengthen its relationships with Japanese Original Equipment Manufacturers (JOEMs), which account for over 25% of global passenger vehicle production.
• Entry into New Product Lines: The acquisition will allow Motherson to diversify its offerings, particularly into chassis and transmission components, which are essential for both 4W and 2W segments.
• Global Machining Capabilities: Atsumitec’s expertise in metal and machining processes, such as heat treatment, carburizing, grinding, and broaching, aligns with Motherson’s strategy to diversify its product portfolio and expand its global footprint.
• Geographical Diversification: The deal also facilitates Motherson’s entry into new markets, particularly in Vietnam, with a focus on the 2W segment.

3. Transaction Details

• Transaction Value:
  The total value of the acquisition is approximately JPY 8.5 billion (~USD 57 million), based on a locked-box mechanism as of March 31, 2024.

• Acquisition Process:
  The transaction will be executed in multiple steps, with SAMIL set to procure shares from other shareholders of Atsumitec, including special purpose companies (SPC). By Q4FY25, Motherson is expected to become the largest shareholder with consolidation rights. The final acquisition of 95% ownership and the restructuring of the board will be completed by Q1FY26.

• Regulatory Approvals:
  The deal is subject to regulatory approvals, including merger control clearance from relevant authorities in Japan.

4. Business Synergies and Strategic Rationale

• Customer Diversification:
  The acquisition will broaden Motherson’s customer base, leveraging its strong relationships with Japanese OEMs and enhancing cross-selling opportunities.

• Global Footprint:
  Atsumitec’s nine facilities across seven countries (Japan, China, USA, Mexico, Thailand, Indonesia, Vietnam) will expand Motherson’s geographical reach, particularly in emerging markets.

• Long-term Business Growth:
  By consolidating Atsumitec’s advanced machining capabilities, Motherson aims to enhance its ability to serve a wider range of industries, strengthening its market position in the global automotive sector.

5. Financial Performance of Atsumitec

• Revenue Growth: Atsumitec has shown steady growth in the past three years, with revenues of approximately JPY 62 billion (~USD 412 million) for FY 2023-24, up from JPY 55 billion in FY 2022.

• EBITDA: Atsumitec's EBITDA has fluctuated, with a margin of 7.5% in FY 2024, reflecting its consistent profitability in a competitive market.

6. Conclusion

This strategic acquisition by Samvardhana Motherson International Limited represents a significant step in expanding its business portfolio, improving its machining capabilities, and strengthening its relationships with Japanese OEMs. The phased nature of the deal, combined with regulatory approvals, positions Motherson to reap long-term benefits from enhanced diversification and global expansion. By Q1FY26, Motherson is expected to finalize the acquisition, marking a key milestone in its global growth strategy.

The Upcoming IPOs in this week and coming weeks are Dhanlaxmi Corp, Jungle Camps, Toss The Coin, Sai Life Sciences, Mobikwik, Vishal Mega Mart, Supreme Facility, Purple United, Rosmerta Digital, Inventurus Knowledge and Avanse Financial.The Current active IPO is Nisus Finance and Emerald Tyre Manufacturers.For more details on upcoming IPOs, you can visit our page at Best IPO to Apply Now - IPO List 2024, Latest IPO, Upcoming IPO, Recent IPO News, Live IPO GMP Today - Finance Saathi and stay updated with the latest news on IPO updates on Top News Headlines - Share Market News, Latest IPO News, Business News, Economy News - Finance Saathi.Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst & Finance Saathi Telegram Channel for Regular Share Market, News & IPO Updates.Start your Stock Market Journey and Apply in IPO by opening a Free Demat Account in Choice Broking FinX.