Samvardhana Motherson International to acquire 81% stake in Honda Motor arm

Samvardhana Motherson

Auto components maker Samvardhana Motherson International Ltd on Tuesday said it will acquire an 81 per cent stake in the four-wheeler business of Yachiyo Industry, a Honda Motor subsidiary.

The company has entered into a partnership with Honda Motor under which it will form an 81:19 strategic partnership with the latter where both partners will drive the company towards a strong and sustainable future and be fully prepared for next-generation products and technologies, Samvardhana Motherson International Ltd (SMIL) said in a statement.

Yachiyo Industry Co Ltd is a publicly listed firm on the Tokyo Stock Exchange. It is a subsidiary of Honda Motor Co Ltd. It has four-wheeler (4W) and two-wheeler (2W) businesses.

"As a part of the overall transaction, the 2W business will be transferred to Honda Motor before Motherson acquires 81 per cent stake in Yachiyo's 4W business," the statement said.

In a regulatory filing, the company said the cost of acquisition is at an "equity value of JPY 22.9 billion for 100 per cent stake subject to any adjustments in relation to above transaction." Yachiyo 4W supports Honda Motor in substantially all of its sunroof and fuel tank requirements at each manufacturing location, the statement said.

"Sunroof systems have high growth potential globally due to an increase in demand and are expected to see a surge in application across all car segments," it said.

Further, the transition to hybrid will continue to see the use of plastic fuel tanks. The trend of fuel cell powertrain is also aligned with Type-IV hydrogen storage tanks under advanced stages of development, it added.

"These new product segments are in line with our increasing content per car strategy as well as our customer-centric approach. We believe this business will be highly synergistic with Motherson's existing portfolio as we see ample opportunities to grow this new business globally by leveraging our global relationships with automotive OEMs," Motherson Chairman Vivek Chaand Sehgal said.

Yachiyo 4W business employs around 3,200 employees in its 13 manufacturing facilities and three R&D centres across 8 countries including the US, Brazil, Mexico, China, Japan, Thailand, Indonesia and India.

It had reported a revenue of JPY 116 billion in FY23.

Motherson said with its experience of working alongside a global OEM like Honda Motor and coupled with its own technologically advanced R&D capabilities, Yachiyo 4W is well positioned to cater to the evolving industry landscape and future mobility.

Yachiyo 4W has developed multiple value-added next-generation products like lighter plastic tailgates and type-IV hydrogen storage tanks.

"The close proximity to Honda Motor plants across the globe provides an opportunity to offer existing products of Motherson to Honda Motor globally," Motherson said, adding, post successful closure of the transaction it would become a partner of choice for Honda Motor.