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    Motherson Sumi eyes deal with auto cable company Leoni

    Synopsis

    The company had brought in a new chief executive in September to facilitate a comprehensive restructuring programme after it cut its earnings targets.

    The acquisition with Leoni will help Motherson Sumi to reach $18-billion annual targets by 2020.
    MUMBAI | NEW DELHI: Motherson Sumi, India’s leading auto ancillary company, is in talks to acquire or merge with Germanybased Leoni, the largest maker of special automotive cable globally, according to two people familiar to development.

    Leoni is listed on German exchange and has a market capitalisation of €1.03 billion. The Nuremberg-headquartered company manufactures wire systems, electric power distribution, modular cable harnesses, and battery cables. Its products are well placed to tap new opportunity for electric mobility and autonomous driving.

    The Leoni’s stock gained 18% on Wednesday trade on the German stock exchange, on the speculation of a potential deal, although it fell 50% in the past one year. The company had brought in a new chief executive in September to facilitate a comprehensive restructuring programme after it cut its earnings targets.

    However, the discussions may still not lead to an eventual transaction, warned one of the sources mentioned above. The deal structure is still not finalised.

    The company had annual revenue of €4.9 billion in 2017 and it grew 12% annually between 1999 and 2017. It derives nearly 82% of its revenues from the automotive segment and remaining from the industrial segment which caters to robotics and healthcare. Leoni caters to clients such as Audi, BMW, Mercedes, JLR, Peugeot and Citroen. In the first nine months of 2018, Leoni’s revenue grew 5.9% y-o-y to €3.8 billion, while operating profit fell 12% to €163 million due to the increasing level of ramp preparation cost and higher raw material.

    The acquisition with Leoni will help Motherson Sumi to reach $18-billion annual targets by 2020.

    When contacted, Vivek Chaand Sehgal, chairman of Motherson Sumi Systems Limited (MSSL), declined to comment. Mails sent to Leoni late on Wednesday evening did not generate a response till press time.
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