Stahlschmidt Cable Systems is being acquired from insolvency proceedings in Germany for an enterprise value of €13.5 million. Upon completion of the acquisition, it is anticipated to contribute €50 million in revenues to Suprajit.
Suprajit Engineering, a manufacturer of automotive cables and halogen bulbs, is in the process of acquiring the German company Stahlschmidt Cable Systems (SCS), which specializes in light-duty cables. The acquisition is taking place out of insolvency proceedings with a declared enterprise value of €13.5 million. To facilitate this, a share and asset purchase agreement has been executed.
Stahlschmidt is recognized for its cost-effective production facilities in Morocco, its proficient engineering and sales team in Germany, and its ability to export to China through Canada. It operates manufacturing plants in Morocco and China and was in the midst of transferring production from Poland to Morocco due to a financial shortfall, which ultimately led to insolvency.
The acquisition will be carried out through Suprajit USA Inc. and will include the establishment of new entities in Canada and China, alongside the recently formed Suprajit Germany GmbH, to effectively complete the transaction. The net equity value will be adjusted downwards after accounting for corporate debts and similar liabilities.
This strategic acquisition is set to enhance Suprajit’s global presence in the light-duty cable market. According to Ajith Rai, the founder and Chairman of Suprajit, the post-acquisition phase will focus on consolidation and restructuring which are expected to enhance customer service, drive global growth, and improve profit margins over time.
As part of the acquisition strategy, Suprajit plans to acquire SCS’ operational assets across Germany, Canada, China, Poland, and Morocco, with plans to close the Polish operations and streamline the workforce at the German headquarters. This will be followed by an extensive restructuring initiative slated to last one year.
The deal stipulates a significant debt reduction as a precondition for closure, with funding sourced from internal accruals and existing cash reserves. Post-acquisition, SCS is projected to increase Suprajit’s revenue by €50 million.
The transaction will occur in two phases. The initial phase will involve the integration of operations in Germany, Poland, and Morocco by July 1, contingent upon debt reduction and other prerequisites. The subsequent phase will incorporate the Canadian and Chinese segments a few months later.
Grant Thornton Bharat LLP India serves as the exclusive financial advisor, while Oppenhoff & Partner in Germany provides legal counsel to Suprajit for this transaction.
