Indian MUV specialist Mahindra & Mahindra (M&M) has made a deal with VCST. The negotiation is to take over the e200-million Belgian automotive gear maker. It’s going to cost M&M around e275 million (Rs 1,400 crore). However, when a premier business daily tried to contact the president of the automotive component division of M&M, Mr. Hemant Luthra refused to comment on the deal and the cost both.
The sources said that the VCST acquisition process has just started. It’s also a deal of M&M’s larger strategy to consolidate its gear business in the European market.
VCST already has a presence in India, which designs and manufactures gears, gear sets and shafts for automotive transmissions, engines and brakes. In 2007, it formed an equal joint venture with Amtek Auto.
This recent gear strategy would influence the acquisition of VCST alongside the proposed strategic partner in Europe. This will also replicate what M&M has done with forging. In the forging space, M&M acquired three companies - first Stokes Forgings in the UK followed by Jeco Holding AG and Schöneweiss GmbH in Germany. Many sources also pointed that the European acquisitions were important for M&M because they would earn the company a presence in the high-margin truck and off-road gear business.