Sakthi Group buys Intermet Europe for $130mn

Coimbatore-based Sakthi Group today announced the acquisition of Intermet Europe from US-based Intermet International Inc for $130 million.

The acquisition will be executed through Sakthi Auto Components, a wholly-owned subsidiry of Sakthi Sugars.

The acquisition will result in a significant shift in the revenue mix of the group. The auto components business of the group is now expected to grow faster and contribute more revenue than the traditional businesses of sugar and food products. Currently, the sugar business has an annual turnover of about Rs 850 crore, while auto components fetch about Rs 200 crore. 

Intermet Europe owns and operates two plants in Germany and one plant in Portugal, and is engaged in the manufacture of precision ductile iron castings for the automotive industry with a total annual capacity of 1,65,000 metric tonnne. It employs about 1,500 people, and posted a turnover of 165 million euro last year.

The merged entity, to be known as Sakthi Automotive Group (SAG), will be headquartered in Saarbrucken, Germany, and have a strong presence in both the European and Asian markets. 

Sakthi Auto has two plants to manufacture ductile and grey iron precision castings with a capacity of 60,000 metric tonne, which will be increased by 30,000 MT this year. 

Addressing the media via a video conference, M Manickam, chairman and managing director, Sakthi Auto Components, said the acquisition has brought the technology and expertise of Intermet Europe to the group to serve its customers effectively. With no significant customer overlaps, markets or products, the acquisition would provide a sound base for future growth and knowledge sharing, he added.

Sakthi Auto will fund the acquisition cost of $130 million through $75 million raised in debt and the rest as equity in the form of promoter funds and preferential share allotments to investors. Sakthi Sugars is expected to contribute about $15 million.