Suprajit Engineering, a manufacturer of automotive cables and halogen bulbs, has announced the acquisition of German light-duty cable company Stahlschmidt Cable Systems (SCS) out of insolvency proceedings. The deal, valued at €13.5 million, aims to bolster Suprajit’s global manufacturing capabilities.
Suprajit has signed a share and asset purchase agreement to acquire SCS, which includes low-cost manufacturing facilities in Morocco, a robust German engineering and sales team, and an export operation to China through Canada. SCS currently operates plants in Morocco and China and had been relocating its manufacturing operations from Poland to Morocco when financial difficulties led to insolvency.
The acquisition will be executed through Suprajit USA Inc. Additionally, Suprajit will establish new entities in Canada and China and has recently set up Suprajit Germany GmbH to facilitate the transaction. The equity value of the acquisition is expected to be lower after accounting for corporate debt and other debt-like items.
Ajith Rai, Founder and Chairman of Suprajit Engineering, expressed optimism about the acquisition. “This acquisition, post its consolidation and restructuring, will yield improved customer service, global growth, and margin improvements over the medium term,” Rai stated.
Suprajit will acquire SCS’s assets in Germany, Canada, China, Poland, and Morocco. The company plans to shut down operations in Poland and reduce the workforce at SCS’s headquarters in Germany, followed by a comprehensive restructuring plan over the next year.
The acquisition is contingent upon significant debt reduction, which must be completed as a condition precedent to closing the deal. Suprajit intends to fund the acquisition using internal accruals and cash reserves. The company anticipates that SCS will contribute approximately €50 million in revenues post-acquisition.
The transaction will be completed in two stages. The first stage, involving the companies in Germany, Poland, and Morocco, is expected to close by July 1, subject to certain debt reduction, critical restructuring, and other conditions. The second stage, comprising the firms in Canada and China, is expected to be completed a few months later.
Grant Thornton Bharat LLP India serves as the sole financial advisor, while Oppenhoff & Partner, Germany, is the lead legal advisor to Suprajit for this transaction.
