CIE Automotive (Spain) and the Mahindra Group (India) announced today the signing of a global alliance agreement between CIE Automotive (involving its subsidiary Autometal) and Mahindra’s automotive component businesses (held under its Systech Sector).
The agreement enables the Asian expansion of CIE Group and will allow CIE to reach annual sales of approx 2.225 million euros, implying a growth of 580 million euros compared to 1.645 million euros in 2012. The Group will now have operations in North America, South America, Europe and Asia held through listed businesses in Spain, Brazil and India.
As part of the transaction CIE Automotive -through Autometal- will acquire from Mahindra Group a stake in its listed and unlisted companies from the Systech Automotive Component business and contribute its forging businesses in Spain and Lithuania and together consolidate all companies under MFL which will be rechristened Mahindra CIE and will continue to be listed on BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). The share sale by Mahindra will trigger open-offer provisions under the Securities Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011.
The proposed business transaction will be carried out in a series of steps over the next year that will culminate in:
1. CIE Automotive taking a majority stake in a single listed entity in India which will continue to operate the current Systech automotive component businesses globally and include CIE’s European forgings operations.
2. M&M taking a stake of 13,5% in CIE Automotive, which is listed on the Madrid Stock Exchange making it the second largest share holding of CIE. M&M will nominate 2 Directors to the CIE Board.
“Eight years ago, we at Mahindra set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe for us. We have been listening closely to our customers who have asked to step up our globalisation efforts and follow them around the world. This Grand Alliance with CIE enables us to “Rise” above competition, quickly extend our reach into new geographies, and grow our collective product portfolio in the coming years”, said Anand Mahindra, Chairman of the Mahindra Group.
Anton Pradera, Chairman of CIE Automotive, said, “CIE’s leadership and shareholders have set up a strategy to develop the Asian market through India as the gateway to Asia. We have been impressed by the promise of the Indian automotive market and the growing emergence of India as a key global production hub for small cars. In Mahindra, we found a partner that has a multi-technology portfolio similar to ours and shared the same business values. So while we are happy to see CIE gaining an entry to India, we are equally pleased to have M&M as one of CIE’s largest shareholders”
Jesus Maria Herrera, CEO of CIE Automotive and Chairman of Autometal, noted that “CIE’s focus on growth with operational excellence is a value shared with the Mahindra Group. This alliance is a step ahead to become one of the most relevant suppliers in the sector in our technologies with presence in all regions, we see a bright future ahead of us.”
Hemant Luthra, President of Mahindra’s Systech Sector commented,”Systech businesses are the result of acquisitions and alliances that we have struck around the world as we sought to quickly gain scale in the components business with our unique “Art to Part” proposition. This Alliance with CIE dwarfs everything we have done in the past and marks the next bold step towards global supplier consolidation”.
