Sona Okegawa to buy German co’s arm

In one of the biggest acquisitions in the auto component sector by an Indian company...

In one of the biggest acquisitions in the auto component sector by an Indian company, Sona Okegawa Precision Forgings Ltd on Monday announced plans to acquire German auto component heavyweight ThyssenKrupp Präzisionsschmiede GmBH, a subsidiary of ThyssenKrupp Technologies A G (a Euro 51 Billion Group). The acquisition will make Sona Okegawa the biggest forgings group in the world. ThyssenKrupp Präzisionsschmiede GmBH is a euro 291 million company with three plants in Germany and a plant in the US.

The acquisition will be completed in the last week of January. Sona Okegawa will then become the largest precision forgings group in the world. Besides precision forgings, the European plants produce heavy duty vehicle products as well as cold forged Hatebur parts. Sona Okegawa will now have six plants. The major customers of the European operations are Daimler Chrysler, Volkswagen, GM, Renault, BMW and ZF Lemforder. ThyssenKrupp has a 24 per cent market share in forgings business.

The German company is nearly ten times the size of Sona Okegawa which has a turnover of around Rs 180 crore and supplies to companies like Bajaj Auto, Tata Motors, Maruti Suzuki, Mahindra and Mahindra and Eicher Motors.

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While the capital investment that would be made towards the acquisition was not divulged, Sona Okegawa said that it would be partly funded through equity and debt raised from overseas sources. The company had earlier indicated plans of setting up a greenfield facility in US which is now being shelved.

“Sona Okegawa developed a business strategy to have a global footprint to service customers and this acquisition fulfils that strategy. I am certain that the synergies we will bring about with low cost development and engineering skills of India and high levels of productivity and leading technology from ThyssenKrupp, will create value for global customers. ” said Dr Surinder Kapur, chairman, Sona Okegawa Precision Forgings Group. “With this acquisition through which we will also be managing the group’s plant in US, there is no need for us to go ahead with our plans of setting up a greenfield facility there,” he said.