Automotive company Samvardhana Motherson International’s shares zoomed 5.7% to reach an intraday high of ₹ 84.25 apiece after the company announced the acquisition of Germany-based SAS Autosystemtechnik through its step-down subsidiary Samvardhana Motherson Automotive Systems Group B.V., Netherlands.
At 01:11 PM on Monday, Samvardhana Motherson International share was quoting at ₹ 82.25 apiece and 2.49 crore shares had changed hands amid heavy volumes.
The transaction will happen at an enterprise value of 540 million euros (around ₹4,789 crores) and is subject to merger control clearance required from the European Commission and from the national merger control authorities of China, Brazil, Mexico and the United States. The deal is expected to be closed within a time period of 5-8 months from the date of signing (July-September 2023).
SAS Autosystemtechnik GmbH, Germany, a company of the FORVIA Group is a leading provider of cockpit module assemblies.
The object and effects of the acquisition include enhancing integration in the automotive supply chain thereby increasing customer proximity and helping the company achieve product diversification across customers, products and geography with increased exposure to electric vehicle programs.
According to foreign brokerage firm Jefferies, with an enterprise value of €540 million, the transaction multiple of CY22 EV/EBITDA at 5.3x is reasonable.
“This business has significant entry barriers due to deep expertise and customer trust. It will lead Motherson to increased customer proximity, more content per vehicle for other product lines and increased exposure to EV programs,” said domestic brokerage Motilal Oswal.
The brokerage in its research report dated 08 February 2023 gave a buy call on the shares of the company with a target price of ₹ 100. This indicates an upside of 21.58% as compared to its share price of ₹ 82.25 apiece.
Written by Simran Bafna
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