The divestment is part of Varroc Engineering's strategy to align its resources with the high value and high growth primary markets in China, India, and the two-wheeler sector globally.
29 Apr 2022 | 5247 Views | By Autocar Pro News Desk
Varroc Engineering, a leading Tier-1 automobile component maker said it has signed a Securities Purchase Agreement (SPA) with Compagnie Plastic Omnium SE of France to divest its four-wheeler lighting systems operations in the Americas and Europe.
The divestment is part of Varroc Engineering's strategy to align its resources with the high ...
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Varroc Engineering, a leading Tier-1 automobile component maker said it has signed a Securities Purchase Agreement (SPA) with Compagnie Plastic Omnium SE of France to divest its four-wheeler lighting systems operations in the Americas and Europe.
The divestment is part of Varroc Engineering's strategy to align its resources with the high value and high growth primary markets in China, India, and the two-wheeler sector globally.
The Euro 600 million transaction will see Varroc divesting its lighting System operations in the USA, Brazil, Mexico, Poland, Czech Republic, Germany, Turkey, and Morocco, the company said in a statement. However, Varroc will also continue to operate its China JV and other international two-wheeler businesses in Italy and Vietnam and global electronics businesses in Poland and Romania. The company is retaining its 4-wheeler lighting operations in Asia, the statement added.
As per the company, the development in the Americas and Europe will ensure enhanced shareholders’ value, sustainable growth, and further development of its R&D facilities and engineering capabilities. Besides the identified growth area focus, Varroc’s lighting systems and other businesses in India, namely design, manufacture, and supply of a diverse range of Polymer, Electrical-Electronics and Metallic components will continue to enjoy a leadership position in these business segments.
Tarang Jain, Chairman & Managing Director of Varroc Engineering said: “Our immediate goal is to be future-ready with continued profitable growth in emerging sectors like the EV and high technology electronics. The divestment of our passenger car lighting operations in the Americas and Europe will be a win-win deal for Varroc and Plastic Omnium. For us, we unlock great value for all our shareholders, employees, and business partners as we plan for our next level of growth in the fastest-growing economies and auto sectors in the world. We will also continue to invest in our teams and people as we embark on the next phase of our growth.”
Laurent Favre, CEO, Plastic Omnium, “Varroc Lighting Systems is a strategic addition to our business that will provide us with an extensive lighting product portfolio, a balanced footprint across best-cost countries and cross-selling opportunities. Building on our operational excellence, financial strength, and long-term vision we have identified clear levers to bring VLS to best-in-class operating performance.
With the Indian automobile sector, including two-wheeler, three-wheeler, and passenger car segment, poised to grow at 10-12 percent CAGR over the next 4-5 years, and with emerging alternative technologies in electric vehicle (EV) mobility, Varroc will be investing in operations and R&D to enhance its shareholders’ value by creating a robust and financially strong operation, ensuring higher return on investments. Rothschild & Co acted as the exclusive financial advisor to VEL on the transaction, the statement concluded.
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