In a bid to transform itself into a high-tech company and focus on the existing growth of electronics, connectivity, electrical vehicles (EVs) product lines and the 2-wheeler segment globally, Varroc Engineering Limited (VEL), has signed a Securities Purchase Agreement (SPA) with Compagnie Plastic Omnium SE of France to divest its 4-wheeler lighting systems operations in the Americas and Europe.
The divestment is part of VEL’s (Varroc) strategy to align its resources with the high value and high growth primary markets in China, India, and the two-wheeler sector globally.
The Euro 600 million transaction will see Varroc divesting its lighting System operations in the USA, Brazil, Mexico, Poland, Czech Republic, Germany, Turkey, and Morocco.
Varroc will also continue to operate its China JV and other international 2-wheeler businesses in countries like Italy and Vietnam and global electronics businesses in Poland and Romania. The company is retaining its 4-wheeler lighting operations in Asia.
The planned divestment of Varroc’s 4-wheeler lighting systems businesses in the Americas and Europe will ensure enhanced shareholders’ value, sustainable growth, and further development of its R&D facilities and engineering capabilities.
Commenting on the development, Tarang Jain, Chairman & Managing Director of Varroc Engineering said: “Our immediate goal is to be future-ready with continued profitable growth in emerging sectors like the EV and high technology electronics. The divestment of our passenger car lighting operations in the Americas and Europe will be a win-win deal for Varroc and Plastic Omnium.”
He added, “For us, we unlock great value for all our shareholders, employees, and business partners as we plan for our next level of growth in the fastest-growing economies and auto sectors in the world. We will also continue to invest in our teams and people as we embark on the next phase of our growth.”
Laurent Favre, Chief Executive Officer of Plastic Omnium said, “Varroc Lighting Systems is a strategic addition to our business that will provide us with an extensive lighting product portfolio, a balanced footprint across best-cost countries and cross-selling opportunities. Building on our operational excellence, financial strength, and long-term vision we have identified clear levers to bring VLS to best-in-class operating performance.”
Besides the identified growth area focus, Varroc’s lighting systems and other businesses in India, namely design, manufacture, and supply of a diverse range of Polymer, Electrical-Electronics and Metallic components will continue to enjoy a leadership position in these business segments.
With the Indian automobile sector, including 2-wheelers, 3-wheelers, and passenger car segment, poised to grow at 10-12 % CAGR over the next 4-5 years, and with emerging alternative technologies in electric vehicle (EV) mobility, Varroc will be investing in operations and R&D to enhance its shareholders’ value by creating a robust and financially strong operation, ensuring higher return on investments. Rothschild & Co acted as the exclusive financial advisor to VEL on the transaction.