Samvardhana Motherson shares jump 4% on SAS acquisition

Shares of automotive supplier Samvardhana Motherson International Ltd rose 4% on Monday after the company said its subsidiary will acquire 100% stake in SAS Autosystemtechnik GmbH from French auto component major Faurecia.

The Samvardhana Motherson stock climbed 4% in intraday trade to ₹83.50 apiece on the National Stock Exchange (NSE).

The enterprise value of SAS, which provides assembly and logistics services to the automotive industry, is 540 million euros (₹4,790 crore) and the transaction will be funded by a mix of debt and internal accruals, according to Samvardhana's stock exchange filing.

The deal is expected to close by Q2 FY24.

SAS has strong customer relationships with European and American OEMs, some of which span almost three decades. In the calendar year 2022, the company reported net revenue of 896 million euros, with almost half of it contributed by EV programmes. It also clocked EBITDA (earnings before interest, taxes, depreciation, and amortization) of 103 million euros.

Its orders in hand already secured are of over 3 billion euros in cumulative net revenues over the next three years, the filing says.

This acquisition will transform Motherson Group to be a leading assembler of cockpits modules globally, with special focus on EV models, says Vivek Chaand Sehgal, chairman, Motherson.

"We have always added new products and technologies to closely serve our customers in a more cohesive way. The acquisition of SAS is an important step in this direction. By adding complementing capabilities which SAS brings, we will be able to further enhance our tier 0.5 position with our customers. With this acquisition, we will be even more diversified in our customer base and products," Sehgal says. Tier 0.5 suppliers work long-term with their customers, often jointly setting cost targets and sharing product developments.

SAS has more than 5,000 employees in over 24 manufacturing locations in Europe, Asia, and America. "We look forward to welcoming over 5,000 new members into the Motherson family," he adds.

SAS is engaged in the development, engineering, manufacturing, testing, logistics, distribution and assembly of cockpits, consoles, door panels, headliner, rear hatches, coding modules, front-end modules and front cradles for the automotive industry.

The transaction will be another step further enhancing Motherson's integration in the global automotive supply chain and increase its customer proximity, the filing says.

With its strong capabilities in assembly, automation and logistics, SAS is well positioned to benefit from the secular trend of outsourcing of module assembly by OEMs to trusted suppliers, it adds.

SAS is currently present in Germany, Spain, Brazil, Turkey, Argentina, France, Czech Republic, Slovakia, China, Mexico, Portugal, and the United States.