Motherson Sumi Systems to acquire Visiocorp Plc, UK

Motherson Sumi Systems has decided to acquire Visiocorp Plc of the UK, a global leader in the rear-view mirror business, for an undisclosed amount.

The acquisition would catapult Motherson to a global leadership position in the mirrors business, giving it access to Visiocorp’s global OEM customers such as Daimler, VW, Nissan and Renault, General Motors and Ford besides a wide geographical reach.
Motherson Sumi chief operating officer Pankaj Mittal said it was at the behest of Visiocorp’s European customers that this deal was done.

“All the European OEMs were keen that we acquire Visiocorp……this acquisition makes a lot of strategic sense for us. Mirrors need capabilities in tooling, designing, wiring harnesses etc which we already have at Motherson Sumi. This acquisition will give us access to 17 manufacturing plants of Visiocorp and customers spread over a wide geography — a truly global reach.”

Motherson already has a 49:51 joint venture with Visiocorp in India, called Visiocorp Motherson, and claims a dominant 45% share of the domestic rear- and side-view
mirror market.

The acquisition would be completed by February 2009 and would be done through creation of a special purpose vehicle (SPV).

In this SPV, Motherson Sumi Systems will hold a 51% stake while the remaining 49% will be held by unlisted finance arm, Samvardhana Motherson Finance, which is controlled by the promoter family.

The proposed SPV will have a capital base of 30 million euros and Motherson plans to fund its part of the investment from internal accruals. Visiocorp had revenues in excess of 700 million euros in 2007.

Motherson Sumi Systems is already a leader in wire harnessing, controlling over 65% of the domestic passenger vehicle market. It is now focusing on the supply of higher level assemblies and modules which are comparatively higher margin segments. The company is also increasing content per car in its bid to diversify product portfolio.

This acquisition fits the company’s increasing emphasis on getting a globalised product portfolio. According to analysts, Motherson wants to achieve 60 per cent of consolidated turnover from its overseas clients.