Ja­pan’s JTEKT Close to Buy­ing Out Sona Group from their JV

Deal to end 32-year tieup, val­ues Sona Koyo Steer­ing Sys­tems at up to ₹ 1,800 cr

The Economic Times - - Companies: Pursuit Of Profit - @times group.com

New Delhi: Ja­panese au­to­com­po­nent maker JTEKT Cor­po­ra­tion is set to buy out its In­dian part­ner Sona Group’s 25% stake in Sona Koyo Steer­ing Sys­tems for about ₹ 550-575 crore, thereby end­ing their 32-yearold long as­so­ci­a­tion.

The deal, likely to be signed on Wed­nes­day or in the next cou­ple of days, will be priced at ₹ 8590 per share, valu­ing the joint ven­ture com­pany at ₹ 1,700-1,800 crore, said two per­sons in­volved in the trans­ac­tions.

Sun­jay Ka­pur is the chair­man of Sona Koyo and his fa­ther Surinder Ka­pur was the founder chair­man of the com­pany. ET had re­ported the pos­si­bil­ity of a deal last week. The Sona Koyo Steer­ing Sys­tems spokesper­son did not re­spond to the email queries till the time of go­ing to press, while JTKET Cor­po­ra­tion could not be reached for com­ments.

“This pro­posed buy­out is in line with the strat­egy of Ja­panese auto com­po­nent mak­ers, which are try­ing to con­sol­i­date their pres­ence in In­dia by buy­ing out their lo­cal part­ners. These are mostly Maruti Suzuki ven­dors and sim­i­lar deals will also take place in other auto com­po­nent joint ven­tures,” said a per­son fa­mil­iar with the de­vel­op­ment.

The In­dian part­ners have agreed to sell at a mar­ginal pre­mium to the av­er­age of last six months price. Its share price has jumped by over 32% in the past one month. On Tues­day, its share price rose 2.9% to close at ₹ 81.80 on the Bom­bay Stock Ex­change.

JTEKT, that owns lit­tle over 20% stake in the joint ven­ture, will also make an open of­fer af­ter en­ter­ing into a bind­ing agree­ment with Ka­pur for pur­chas­ing 25% shares from ex­ist­ing in­vestors un­der the takeover code, said the first per­son quoted above. “JTEKT’s pur­chase of shares from Ka­pur is an in­ter-se trans­fer be­tween the two pro­mot­ers; the ac­quirer will have to make an open of­fer due to the fact that there is change in the man­age­ment as the In­dian pro­moter, Ka­pur, is ex­it­ing from the man­age­ment com­pletely,” said the first per­son.

This will be the sec­ond split be­tween long-term In­dian and Ja­panese part­ners in the au­to­mo­tive seg­ment af­ter Hero and Honda parted ways in 2010. The In­dian pro­moter owns 25.28% of the joint ven­ture com­pany while the Ja­panese com­pany owns 20.1%. Maruti Suzuki, which is a key cus­tomer of the com­pany, own 6.94%, and the rest is held by re­tail and in­sti­tu­tional in­vestors.

Sona Koyo Steer­ing Sys­tems, the flag­ship com­pany of the Sona Group, is one of the largest man­u­fac­tur­ers of steer­ing sys­tems for pas­sen­ger cars and util­ity ve­hi­cle mar­ket in In­dia.

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