Motherson Sumi rumoured to be in talks with Germany based Leoni for possible merger

The unconfirmed news suggests that Motherson could add to its kitty of acquisitions with a deal worth more than €1bn

Dec 14, 2018 03:12 IST India Infoline News Service

Global auto ancillary major, Motherson Sumi Systems Limited (MSSL), could be in early stage talks to acquire German auto ancillary maker Leoni AG (Leoni), as per Reuters. The news is unconfirmed as yet. The deal, if it materializes, could be worth more than €1bn ($1.14bn). MSSL has been scouting for suitable acquisition targets globally that will help it reach its FY2020 revenue target of $18bn. As per MSSL’s June 2018 corporate presentation, it reported consolidated revenue of $9.6bn in FY18 and needs another $8.4bn of revenues to meet its FY2020 five-year target.

Global auto and ancillary makers have been facing several headwinds in recent times due to weak demand in China, trade war between USA and China, drop in sales of diesel vehicles and an inflationary commodity environment. Hence, companies have been looking at ways to grow their top-line, profitability and presence. Leoni’s product portfolio is complementary to that of MSSL as the former manufactures wires, optical fibers, cables, cable systems, and related services and caters to industries such as automobiles, healthcare, communication and infrastructure, electrical appliances, as well as conductors and copper solutions industries. Leoni has presence in more than 30 countries worldwide.

Motherson Sumi Systems Ltd is currently trading at Rs167.35 up by Rs6 or 3.72% from its previous closing of Rs161.35 on the BSE. The scrip opened at Rs163 and has touched a high and low of Rs168.75 and Rs163 respectively. So far 12,23,394 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs50,953.27cr.

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