A consortium of Mahindra & Mahindra (M&M) and ICICI Venture
Funds has signed a definitive agreement to acquire 100% stake in
Italian gear maker Metalcastello. Company officials refused to divulge
details of the deal. The acquisition is part of M&Mâ€™s larger
strategy to consolidate its gear business in the European market.
There were four other bidders, including a couple of European funds and an Indian industrial house along with a private equity player. The promoters of the Bologna-based Metalcastello had approached all the bidders to hike their respective quotes, which ranged between â‚¬ 80 million and â‚¬ 100 million. â€œThe Bologna acquisition will bring cost benefits to M&M and help it in serving global clients,â€ said Systech president Hemant Luthra. Systech is M&Mâ€™s component arm.
Metalcastello has revenues of around $100 million. The company was founded in 1952 and is among the top gear manufacturers in Europe, focused primarily on the off-highway segment. Currently, financial investors hold 84.7% stake in the Italian company, of which 66.5% is held by private equity fund Development Capital, advised by Italian firm Alto Partners, while the top management holds 15.3%. Gabriele Pierotti will continue to be the CEO.
M&M shares ended 2.45% up at Rs 666.25 ahead of the announcement. The shares have fallen 3.83% in the past month.
Metalcastello, the over five-decade-old company, which began as a sub-contractor manufacturing gears and transmission shift rails in small quantities to meet customer demands, has grown to become one of the worldâ€™s leading international players.
It employs over 300 skilled workers and management staffers at Bologna.
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