M&M targets S African firm

TOP GEAR: M&AS DRIVE AUTO-COMPONENTS BUSINESS

The deal size ranges from $200 million to $300 million.

Mahindra Systems and Automotive Technology (MSAT), Mumbai-based Mahindra & Mahindra's auto component division, is in talks with the management of South Africa-based auto component manufacturer S P Metal Forgings for an equity buyout.

The deal size ranges from $200 million to $300 million (roughly Rs 1,100 crore to Rs 1,200 crore).

Hemant Luthra, president, MSAT, declined to comment stating that the "company does not comment on speculation".

Several emails sent to S P Forgings were unanswered.

The 27-year-old S P Metal Forgings has been a large exporter to Europe, the UK and Israel for over three years. It provides parts for BMW, Peugeot and Renault and also services the after-market and non-automotive companies.

The company's overseas sales outstrip its domestic market, which includes such clients as Henred Fruehauf, Jost, Nissan, Ford, Mazda and BMW.

This deal, if it comes through, will be M&M's eleventh buy in three years. It is in line with MSAT's strategy of achieving a top line of $1 billion by 2010 through M&As. 
 

M&M'S ACQUISITION DRIVE
When	Company	Business	Cost	Stake(%)
Nov-04	SAR	Gear cutting	14.5	51
Nov-04	Jianling Tractor	Tractor	35.5	80
May-05	Amforge	Forgings	128.5	47
Nov-05	Axes Technologies	Telecom solutions	240	100
Dec-05	Plexion Technology	Design and engg	37	88
Jan-06	Stokes Group	Forgings	27.2	99
Sep-06	Jeco Holding AG	Forgings	408	68
Nov-06	Hinoday Industries	Ferrous castings	""	66
Jan-07	Schoneweiss and Co	Forgings	""	90
Mar-07	Punjab Tractor	Tractors	951	44
Cost in Rs crore

As in the last financial year, the division contributed revenues of $780 million, or almost 20 per cent, to M&M's turnover.

Forgings alone earned revenues of $485 million in the previous year.

MSAT is also reportedly looking at companies in the UK, Italy, China and Europe for stamping, composites, forging and gear box manufacture.