Motherson Sumi Systems Ltd (MSSL) has announced that it has approved a proposal to launch a voluntary, recommended public tender offer for the acquisition of the outstanding share capital and voting rights of PKC Group Plc (PKC), Finland. The acquisition will be made through a 100 percent subsidiary of MSSL, to be set up for the purpose.

Headquartered in Helsinki, Finland, PKC is a global Tier 1 supplier of wiring harness and associated components to OEMs in the medium and heavy duty commercial vehicle and locomotive segments across North America, Europe, Brazil and China. The price being offered by MSSL is 571 million euros (Rs 4,364 crore) with the transaction is expected to be completed by end of March 2017

PKC has a market leading presence in the wiring harnesses for commercial vehicles in the North America and Europe markets. It also has a significant presence in Brazil and a growing presence in China. PKC had over 22,000 employees and estimated revenue of approximately 846 million euros (Rs 6,466 crore) for the year 2016.

PKC designs, manufactures and integrates tailored electrical distribution systems and related architecture components, vehicle electronics, wires and cables especially for trucks and buses, light and recreational vehicles, construction equipment and agricultural and forestry equipment. In addition, it designs and manufactures electrical cabinets, power packs and electrical distribution systems for leading rolling stock manufacturers.

Why PKC?

MSSL says its proposed acquisition of PKC will help it expand its presence in the niche market of global wiring harness business for commercial vehicles. The combination is expected to be highly value accretive as there is minimal overlap between their existing operations in terms of geographical presence and great synergies in product segments which will unlock the true potential of the combined entity. PKC has a strong presence in American & European wiring harness market for commercial vehicle segment which will provide new opportunities for MSSL to grow in these geographies.

This will be in line with MSSL’s Vision 2020. MSSL also believes it can help PKC in achieving its expansion opportunities given MSSL’s strong market position in the Asia-Pacific region which is a highly attractive market for almost all leading commercial vehicle manufacturers.

As per MSSL’s analysis, all the leading global CV manufacturers and component suppliers are increasingly focused on establishing a presence and gaining market share in the Asian transportation market. Considering that MSSL’s strategic growth plan foresees gains in the commercial vehicle segment, the PKC acquisition will enable the combined company to accelerate growth and improve profitability.

“Wiring harnesses are ever more important to the products of our customers and hold a special place within our hearts at MSSL, because it is our company's genesis,” said Vivek Chaand Sehgal, MSSL’s chairman. “The prospect of two global teams coming together and the synergies that will be brought about, is very exciting to us. It will allow us to create huge value for our customers and to service our customers in additional locations in the world.”