SJS to acquire 90.1% stake in Walter Pack India

SJS Enterprises Ltd (‘SJS’) will acquire 90.1% stake in Walter Pack Automotive Products India Private Limited (WPI) for a total cash consideration of INR 2,393 Mn.

The signing of the definitive agreements for the transformative acquisition of WPI lays the groundwork for a strategic collaboration with Walter Pack Spain and one of its minority shareholders, Antolin.

WPI, a subsidiary of Walter Pack Spain, is a leader in the design and development of high value-added functional decorative parts in the Indian market. The work of Walter Pack’s Color&Trim and R&D departments has made it an international reference in IMD, IML and IME advanced technologies, and especially in IMF, the company’s core business. The agreement between the two makes SJS the leading supplier to the automotive and consumer durables segments in Asia, thanks to WPI’s state-of-the-art facilities in Pune, Maharashtra and Manesar, Haryana, equipped to cater to future growth.

WPI had interim revenues of over INR 1,200 Mn and healthy EBITDA margins of around 30% with an attractive RoCE of over 50% for FY23. Over two-thirds of WPI revenues are from the automotive segment (passenger vehicles) and the balance one-third are from consumer durables segment.

Transaction Overview:
Walter Pack Spain currently holds an 85.0% stake in WPI with the remaining 15.0% held by the Indian promoter and founder, Mr. Roy Mathew. Spanish multinational Antolin, which specializes in automotive interior parts, holds a minority stake in Walter Pack Spain. SJS has signed definitive agreements to acquire 90.1% stake in WPI as follows:
– Acquire the entire 85.0% stake from Walter Pack Spain
– Acquire 5.1% stake from Indian promoter and founder, Mr. Roy Mathew who will continue to own 9.9% stake and will continue to lead the business

SJS would pay a total cash consideration of INR 2,393 Mn for 90.1% stake at an LTM EV / EBITDA of ~7x. Total upfront consideration to be paid at closing would be INR 2,298 Mn and balance would be paid over the next 18 months.

SJS expects to close the acquisition in 5 – 6 weeks.

Financing:
SJS intends to finance the transaction as follows:
– INR 300 Mn via preferential allotment to SJS Promoter & Co-Founder, Mr. K. A. Joseph
– INR 750 Mn to be financed by debt
– INR 1,343 Mn from existing cash balance

Post the acquisition, the consolidated Debt / EBITDA of SJS would be extremely comfortable, much lower than 1x. SJS has hence no plans to raise equity capital in foreseeable future.