The Motherson Sumi stock rose in trade today amid report that the car wiring firm was in early-stage talks to acquire or merge with German peer Leoni.
The deal could be worth more than $1.14 billion. The stock rose up to 11.12% to 179.30 level on the BSE compared to its previous close of 161.35 on the BSE. It has been gaining for the last four days and risen 11.05% during the period. It closed 3.16% higher at 166.45 on the BSE.
However, it has lost 34.15% since the beginning of this year and lost 32.98% during the last one year.
24 of 33 brokerages rate the stock "buy" or 'outperform', six "hold", one "underperform" and two "sell", according to analysts' recommendations tracked by Reuters.
Leoni provides wires, optical fibres, cables, cable systems, and related services. The company's main target market is the automotive and commercial vehicles industry, but it also supplies its products to the healthcare, communication and infrastructure, electrical appliances, as well as conductors and copper solutions industries.
Motherson Sumi has been scouting for a sizeable acquisition target in Europe with the help of an investment bank.
An acquisition of Leoni would add to Motherson Sumi's 180 facilities across 37 countries and bolster overseas sales.
Motherson Sumi, which counts several global automakers including Daimler AG and Volkswagen AG, as clients, had no immediate comment. Leoni declined to comment.
In April this year, country's largest automotive component maker Motherson Sumi Systems announced acquisition of Reydel Automotive Group (Reydel), a privately held portfolio company of Cerberus Capital Management that manufactures interior components and modules for global automotive customers, for $201 million. That was the company's 21st acquisition worldwide.
Reydel is a diversified component player with presence in 16 countries through 20 factories. Its interiors product portfolio includes instrument panels, door panels, console modules, decorative parts and cockpit modules. It had revenues of $1,048 million and operating profit of $68 million for the year ended Dec 31, 2017.(provisional, and in accordance with US GAAP).
Motherson Sumi is a joint venture between Samvardhana Motherson Group and Japan's Sumitomo Wiring Systems. It has snapped up a number of companies in recent years, adding to its range of automotive interior products including rearview mirrors, wiring harnesses and rubber and plastic components.
It is a system solutions provider to automotive and other industries, offering services from design and prototyping to production and delivery of solutions across a range of products.
The company's segments are automotive, which includes product categories, such as wiring harness, high tension cords, wire, plastic components, rubber components, cockpit assembly, scuff plates, thermo-formed products, mold for wiring harness components and mold parts, heating, ventilation and air conditioning (HVAC) modules, plastic molded components and brass terminals, and non-automotive, which includes product categories, such as wiring harness, plastic components for white goods, household wires, plates and aerobin.
The company caters to a range of customers in the automotive and other industries across Asia, Europe, the Americas, Australia and Africa. Parent company Samvardhana Motherson is one of the world's fastest growing specialised automotive component manufacturers, recording a turnover of $10.5 billion in fiscal 2017/18, according to Motherson Sumi's latest annual report.
Parent company Samvardhana Motherson is one of the world's fastest growing specialised automotive component manufacturers, recording a turnover of $10.5 billion in fiscal 2017/18, according to Motherson Sumi's latest annual report.
Edited by Aseem Thapliyal