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Motherson Sumi shares up on merger reports

 

The acquisition machine

Motherson Sumi chairman Vivek Chaand Sehgal

 

  Shares of auto parts maker, Motherson Sumi went up on Tuesday following reports the company is planning to simplify its holding structure by merging the promoter entity Samvardhana Motherson International Ltd (SMIL) with itself in its next board meeting. 

 

When contacted, the company said there is no such proposal under consideration of the board though it had set up an empowered committee of directors way back in January 2014 to evaluate a restructuring proposal. But since then, the committee has not come back to the board with any concrete proposal, the company said.

On Tuesday, Motherson Sumi’s shares closed 1.6% up at Rs 302 a share on Tuesday.  The company has a market value of Rs 39,900 crore as on Tuesday.

As per BSE statistics, the promoters have 65.6% stake in Motherson Sumi and almost 99% stake in SMIL. Merger, if any, would increase promoter’s stake in Motherson Sumi to 75%. Unlisted SMIL has 49% stake in other joint ventures like Samvardhana Motherson Reflectec and Samvardhana Motherson Peguformin.  The rest of the equity in the two JVs is held by Motherson Sumi. 

In a conference call held today, Vivek Chaand Sehgal, Chairman, Motherson Sumi said the group had clarified earlier to the stock exchanges that there are frequent requests from investors to simplify the group structure and the company does get many suggestions from banks/advisors. “As and when any concrete viable proposal for restructuring of the company would be evaluated and recommended by the committee to the board for consideration, the company would make necessary disclosures to the stock exchanges,” Motherson said on June 22nd. “We don’t know when the committee will come back with a proposal – it can be six months, one year or five years,” he told analysts today.