The all-share acquisition deal is worth EUR 13.5 million. SCS will add EUR 50 million in revenues and form a key part of Suprajit Engineering’s global supply chain footprint.
Jun 17, 2024
Suprajit Engineering Limited, has initiated the process to acquire Stahlschmidt Cable Systems (SCS), a light duty cable maker with a marquee customer base, which is currently undergoing insolvency proceedings in Germany. When completed, SCS would add EUR 50 million in revenues and form a key part of Suprajit’s global supply chain footprint. The enterprise value of the acquisition was pegged at EUR 13.5 million and equity value would be less after deducting corporate debt and debt like items. The acquisition was subject to significant debt reduction to be completed as conditions precedent to close. The transaction would be funded completely by internal accruals and cash in the Balance Sheet.
The statement further said that SCS would bring valuable low-cost manufacturing capabilities in Morocco, a strong German engineering and sales team, and China exports through Canada. Headquartered in Germany, SCS has plants in Morocco and China, and was currently relocating manufacturing operations from its current plant in Poland to Morocco, when a funding crunch led to insolvency. The acquisition came with strong customer support and involved significant complexity including asset/equity purchases in Germany, Canada, China, Poland and Morocco, in some cases requiring fresh contracts with customers, vendors, and employees.
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The completion was expected to be in two stages. The first stage (Germany, Poland and Morocco) was expected to close on July 1, 2024, subject to certain debt reduction, critical restructuring and other Condition Precedents (CPs). A few months later, the second stage (Canada and China) would also be completed, subject to certain restructuring CPs in Canada and China. The acquisition would be done through Suprajit USA Inc. Suprajit would be incorporating companies in Canada and China, in addition to the recently set-up Suprajit Germany GmbH to consummate this transaction.
Mr. Ajith Rai, Founder and Chairman of Suprajit said, “This acquisition will further strengthen our global Light Duty Cable manufacturing footprint. Suprajit will have enhanced ability to provide customers with low-cost manufacturing bases, nearshoring capabilities, and a perfect customer centric supply chain footprint. This acquisition, post its consolidation and restructuring, will yield improved customer service, global growth, and margin improvements, over the medium term.”
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Mr. N.S. Mohan, Managing Director and Group CEO said, “This transaction reposes the trust and confidence in Suprajit as a global Cable manufacturer by the major OEMs and Tier 1 vendors in Europe. The acquisition comes with a sound backing by the customers, vendors, and the management of SCS who are committed to nursing back a company with a 100-year-old history”.
Grant Thornton Bharat LLP, India are the sole financial advisor and Oppenhoff & Partner, Germany, are the lead legal advisors to Suprajit for this transaction.
