Sona Okegawa to buy German forging business

By SiliconIndia   |   Wednesday, 23 January 2008, 12:09 Hrs
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New Delhi: Sona Okegawa a manufacturer of automotive component said it plans to acquire the precision forging business of Germany's ThyssenKrupp. The acquisitions will be one of the biggest acquisitions in the auto component space by an Indian firm. Sona Okegawa is a joint venture between India's Sona Group and Mitshubishi Materials of Japan.

The company denied to disclose the value of transaction, however said the acquisition of ThyssenKrupp Prazisionsschmiede (TPG) would make it the biggest precision forgings maker in the world.

"The precision forging business of ThyssenKrupp group has revenues in access of Rs 1,740 crore with 24 percent market share globally. With this acquisition, Sona Okegawa will now control the biggest precision forging business in the world," said Surinder Kapur, Chairman, Sona Group.

After the acquisition German firm would operate as Sona Okegawa's wholly owned subsidiary. The 291 million pound precision forging business of ThyssenKrupp is nearly 10 times the size of Sona Okegawa, which has revenues of about Rs 180 crore and has four plants globally, three in Germany and one in the U.S., and employs over 1,700 people.

"The plans for a greenfield facility in the U.S. have been shelved as we will get access to the market through ThyssenKrupp's facility there," Kapur said.

The acquisition would give Sona Okegawa direct access to many of the global manufacturers, which are TPG's clients.

The company plans to fund the deal through a mix of debt and equity and is presently working out the details for the funding, he added.

"The deal is a cash-free and debt transaction. The amount will be raised in the overseas markets and will not have any recourse on Sona Okegawa?s Indian operations," Kapur said.

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