The Hindu Business Line : M&M to acquire 67.9% stake in German co Jeco Holding

Big buy
It is the largest outbound acquisition in the Indian auto component sector.
Jeco Holding would be acquired through the Mauritius subsidiary of M&M and subsequently will be integrated with Mahindra Automotive Steels Ltd.
M&M is not planning any immediate infusion of capital into Jeco.

(From right) Mr Hemant Luthra, President, Systems and Technologies Sector (Systech); Mr Oliver Scholz, Member, Supervisory Bord of JECO Holdings AG; Mr Thomas Korner, Chief Executive Officer, JECO Holdings AG; Mr Anand Mahindra, Vice-Chairman & Managing Director, Mahindra & Mahindra; Mr Berndt-Ulrich Scholz, Chairman, Scholz AG; and Mr S. Ravindran, Managing Director, Mahindra Automotive Steels Ltd; at a press conference in Mumbai on Thursday. - Shashi Ashiwal

Mumbai , Sept. 28

Mahindra & Mahindra Ltd (M&M) is acquiring a 67.9 per cent stake in Jeco Holding AG, a German forging company, at an enterprise value (total value of the company including debt) of around Rs 830 crore.

Jeco Holding would be acquired through the Mauritius subsidiary of M&M and subsequently will be integrated with Mahindra Automotive Steels Ltd (MASL).

Jeco Holding AG is focused on the truck, bus and trailer market. The company has a capacity to produce around 1,00,000 tonnes forgings per annum with a turnover of €180 million.

Outbound Acquisition

Jeco's top customers include DaimlerChrysler Group, Volvo, Linde, Renault, Agco and Kessler. Scholz AG holds around 90 per cent stake in Jeco Holding AG with the rest held by the management. "This is the largest outbound acquisition in the Indian auto component sector. Jeco Holding is amongst the top five profitable companies in Germany. We have not opted for a 100 per cent acquisition because Scholz AG wants to see their residual stake go up. For us, it is partnering with a well-managed group that will help us to stamp our mark in the US, Germany and India," said Mr Hemant Luthra, President, Mahindra Systems and Technologies Sector (Systech).

On the debt component of Jeco Holding, Mr Luthra said: "It is not a highly leveraged company. The company has managed to stay on the profit side consistently."

M&M is not planning any immediate infusion of capital into Jeco. "The company has enough funds to manage its affairs," Mr Luthra said. According to M&M officials, the board of MASL would be reconstituted to accommodate the members of Jeco Holdings. M&M, which has a turnover of $575 million, plans to touch $1 billion by 2010. Auto components account for nearly 58 per cent of the total business. The tractor segment is worth $800 million.

Auto Components

"The group has taken a decisive and important step towards creating a global class and global scale business in auto components. Our focus will be to give good returns to our shareholders and bring about innovation and technology in to our organisation. This deal has met all our conditions, making it an appropriate investment," said Mr Anand Mahindra, Managing Director and Vice-Chairman, M&M.

Shares of M&M traded at Rs 667.60, up by Rs 12.35 or 1.88 per cent, on the BSE on Thursday. MASL traded at a high of Rs 259.20, up by Rs 20.25 or 8.47 per cent on the BSE.