Sona BLW and Comstar merge; new entity to be called Sona Comstar
Blackstone had acquired an almost 100% stake in Comstar and the merger with Sona BLW will enable it to synergise the two acquisitions
Blackstone, the US private equity firm, has completed the acquisition of a 33% stake in Sunjay Kapur-led Sona BLW and is set to merge the auto parts company with Comstar Automotive Technology, its other subsidiary in India, to offer products for conventional, hybrid and electric vehicles.
The combined company will be called Sona Comstar. Blackstone had acquired an almost 100% stake in Chennai-based auto components maker Comstar for about Rs 1,000 crore and the merger with Sona BLW will enable it to synergise the two acquisitions.
“The Indian automotive components space is attractive, both with India as a manufacturing hub for exports and as a domestic market. The combination of Sona and Comstar is highly synergistic,” said Amit Dixit, head of Blackstone India Private Equity. “There are opportunities to add on to this buy-and-build platform in this fragmented sector, especially in the current environment.”
Kapur will hold 35% in Sona Comstar, while Blackstone will have a 65% stake. The merged entity will include Sona BLW’s European subsidiary.
“With this merged entity, we expect to double our revenue to $1 billion in the next four years. This growth will come from both organic and inorganic expansion. We are actively looking for an acquisition,” Kapur, chairman of Sona Comstar, said, adding that the new entity will go public soon.
Comstar’s products include gear for hybrid and semi-hybrid vehicles and starter motors for conventional engines. The company, with an installed capacity of over 6.8 million electric motors, operates manufacturing facilities in India, the US, Mexico and China.
Sona BLW, with a consolidated turnover of $400 million, designs and manufactures precision-forged bevel gears and differential assemblies for passenger, commercial and off-highway vehicles, including electric vehicles. The company has six plants in north and west India and its European subsidiary operates three facilities in Germany and one in Hungary.
“This transaction marks the amalgamation of the mechanical and electrical capabilities of the two companies. We will now offer our customers integrated technology products and solutions for hybrid, EV as well as conventional powertrains,” Kapur said.
The association will allow Sona to expand to China, the US, Mexico and south India, while Comstar will get access to the north and west India and the European markets. With almost no overlap, both companies can benefit by offering products to each other’s customers.
The companies can combine their R&D efforts and create a joint technology roadmap and solutions.