Suprajit Engineering, an automotive cable and halogen bulb maker, is acquiring German light-duty cable company Stahlschmidt Cable Systems (SCS) out of insolvency proceedings at an enterprise value of €13.5 million.
The company has signed a share and asset purchase agreement to this effect.
SCS boasts of low-cost manufacturing capabilities in Morocco, a strong German engineering and sales team, and China exports through Canada. It has plants in Morocco and China, and is currently relocating manufacturing from its plant in Poland to Morocco, when a funding crunch led to insolvency.
SCS will be acquired through Suprajit USA Inc. Suprajit will incorporate companies in Canada and China, in addition to recently set up Suprajit Germany GmbH to consummate this transaction. The equity value of the acquisition will be lower after deducting corporate debt and debt-like items, the company noted.
The acquisition is expected to strengthen Suprajit’s global light-duty cable manufacturing footprint. “This acquisition, post its consolidation and restructuring, will yield improved customer service, global growth, and margin improvements, over the medium term,” said Suprajit founder and Chairman Ajith Rai.
Suprajit Engineering will acquire SCS’ assets in Germany, Canada, China, Poland and Morocco, shut down operations in Poland, and reduce workforce in Germany headquarters, followed by a comprehensive one-year restructuring plan.
The company noted that the acquisition is subject to significant debt reduction to be completed as conditions precedent to close. Suprajit will fund this transaction with internal accruals and cash in the balance sheet. The company expects SCS to add €50 million in revenues following the acquisition.
The transaction is expected to be completed in two stages. The first stage involves companies in Germany, Poland and Morocco which is expected to be completed on July 1, subject to certain debt reduction, critical restructuring and other condition precedents. The second stage comprising firms Canada and China, is expected to take place a few months later.
Grant Thornton Bharat LLP India is the sole financial advisor and Oppenhoff & Partner, Germany, is the lead legal advisor to Suprajit for this transaction.