The nation's second largest truck manufacturer, Ashok Leyland, is the frontrunner in a race to acquire Turkey's Doktas Casting Company, which has sales of 209 million euros, in one of the Indian auto component industry's largest acquisitions, investment banking sources said on Friday.
Doktas is Turkey's largest iron casting firm and the second largest aluminium wheel maker. Its global customers include auto giants such as Ford, Fiat, Caterpillar and Mercedes Benz. Ashok Leyland and fellow Indian firm Rico Auto Industries have submitted rival bids for the company after completing due diligence work, and the deal is expected to be clinched in the first fortnight of October, the sources said. Ashok Leyland's managing director R Seshasayee confirmed to Hindustan Times that his company had bid for Doktas. “I cannot tell you any thing more than this at this point of time,” he added.
Ashok Leyland has offered around $170 million (Rs. 779 crore) to acquire the entire 100 per cent stake, while Rico Auto has offered around $165 million, an investment banking source said. While refusing to divulge any details, Rico’s managing director Arvind Kapur confirmed that his company was in the race for Doktas Casting. In the past three years, Doktas Castings has reported a compounded annual growth rate (CAGR) of 25 per cent in revenues from 107 million euros in 2002 to 209 million in 2005. Since 1994, the company has invested 110 million euros.
The impending deal came a day after Mahindra & Mahindra Ltd. announced it would buy 68 percent in Germany's forging firm Jeco Holding AG, which has an enterprise value of 140 million euros (Rs. 812 crore).
Mahindra & Mahindra and Bharat Forge, however, have decided to keep away from the fray for Doktas. Bharat Forge’s chairman Baba Kalyani said, “We are continuously evaluating opportunities, but we have nothing do with Doktas.” Mahindra & Mahindra’s chief financial officer Hemant Luthra categorically stated that the company had not submitted a bid for Doktas.
Parent Doktas Holdings owns 51 per cent stake in the casting company, with the remaining 49 per cent is traded on the Istanbul Stock Exchange. Under Turkish stock exchange rules, the acquirer will have to make an open offer to buy out the entire 49 per cent floating stake of the company.
Leading auto ancillary companies from Germany like George Maria GMH have also evinced an interest in Doktas. In 2005, Doktas Casting reported an earnings before interest, tax , depreciation and amortisation (EBIDTA) of about 21 million euros. According to EFG Istanbul Securities, a securities firm, Doktas Casting has a total asset base of about 164 million euros.