 "Bharat Forge acquires US-based Walker Forge Tennessee for $14 mn")
World’s largest forging company Bharat Forge, group company from Kalyani Group today announced the acquisition of US-based Walker Forge Tennessee for a value of $14 million. The acquisition highlights the need for the company to diversify its portfolio in the US.
This proposed acquisition is focused establishing its manufacturing footprint in North America and on increasing product offering into the passenger Car and Commercial Vehicle segments as well into industrial sectors such as Construction & Mining and allied industries. This will also enable them to expand their presence in North America.
The company in a press statement said that the acquisition gives the company a strong manufacturing presence in North America, “The acquisition of Walker Forge Tennessee creates a strategic manufacturing footprint in North America to leverage our existing customer relationships while simultaneously enabling the company to address new end market segments and broaden the product portfolio.”
Bharat Forge has in the recent past continues to emphasise on three aspect which also makes this acquisition fit in. First, it has been wanting to diversify its presence in the US beyond the Class 8 truck segment. Two, it has aggressively tried to diversify into the US passenger vehicle segment, which is minuscule at present. And three, growing the industrial business, but within the oil and gas segment has seen tepid growth due to the slow growth in global oil & gas business.
“I feel this looks more like getting a US presence. But we would like to get more clarity on how does this help in getting new orders and get some OEMs on board,” said Saji John, research analyst, Geojit NBP Paribas.
For many analysts, the announcement came as a surprise as Bharat Forge traditionally has not been aggressive in acquiring in the US. So far its acquisitions have been in the European region. Last year it acquired France-based Mecanique Generale Langroise for 11.8 million euros.
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The company was at its peak with its acquisition strategy in 2004-05. So far the company in total has acquired seven companies. Of these four have been in Europe and one in North America and which are operations. Whereas two—one each in North America and China have been sold off.
These include Kristall Forge of the UK acquired in 2000 at $4.5 million, and two German companies - CDP and CDP Aluminiumtechnik in 2003-04 bought at $50 million and $8 million respectively. In 2005, Bharat Forge acquired Michigan-based Federal Forge for $10 million and Imatra Kilsta AB and its subsidiary Scottish Stampings for $55 million. All these acquisitions have helped the company in expanding its international revenue which is now above 50 per cent.
DONE DEALS
Bharat Forge has acquired seven companies so far, four in Europe and one in North America that are operating
One acquisition each in North America and China have been sold off
2000: Bought Kristall Forge in the UK for $4.5 million
2003-04: Acquired two German companies, CDP and CDP Aluminiumtechnik for $50 million and $8 million, respectively
2005: Bought Michigan-based Federal Forge for $10 million and Imatra Kilsta AB and its subsidiary Scottish Stampings for $55 million
2015: Acquired France-based Mecanique Generale Langroise for 11.8 million euro
