The move by ZF is to comply with anti-trust laws to complete its $7-billion global merger with listed US truck braking specialist Wabco Holdings Inc., said people in the know.
Even though TVS could buyout the partner, global private equity players, international and a select set of home-grown auto component players are expected to join the fray to grab a large piece of India’s largest privately held auto components company that clocked over Rs 5,000 crore in sales in FY19.
A formal divestment exercise is expected to get launched in the coming weeks.
Brakes India was set up in 1962 after UK’s Lucas Industries joined forces with the Chennai-based auto and engineering conglomerate. Lucas is a fully-owned arm of ZF, subsumed through a series of global mergers and amalgamations.
Earlier in the year, ZF informed the US regulators and the Competition Commission of India (CCI) that it was willing to divest its steerings division and its 49% equity holding in Brakes India (BI) as a remedy to fix overlapping products that were getting created due to its global merger with Wabco.
Mails sent to Wabco, Brakes India did not generate a response till press time Tuesday.
Brakes India is the dominant supplier of braking systems to domestic OEMs with a 55-60% market share, especially in the CV and tractor segments with clients ranging from Tata Motors, Toyota, Ashok Leyland, Isuzu, Mahindra, John Deere, Ford, Volkswagen, Nissan, Volvo, and MAN, among others..
It has 15 plants across the country and 9,000 employees. It also has a 51% subsidiary in Oman. The company posted an ebitda of Rs 765 crore in FY19. “The revenues are expected to be 5-7% lower in FY20.
Pre-covid, transactions have taken place at 10-12x ebitda multiples. Taken into account the current slowdown, it is expected to be in the high single digits,” said an industry observer who did not wished to be identified.
