Suprajit Engineering (532509) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of SCS fills a key nearshoring gap in Europe with the Morocco plant, enhancing global supply chain flexibility and Light Duty Cable manufacturing footprint.

• SCS brings a century-old reputation, strong customer relationships, skilled German sales and engineering teams, and export channels via Canada.

• The deal increases wallet share with existing customers, adds marquee customers, and consolidates leadership in the European cable market.

• SCS’s product portfolio is highly complementary, with 95-98% overlap, and offers cross-selling opportunities for actuators and new technologies.

• Acquisition supports long-term growth, positioning the company as a key global supplier with a unique footprint and strengthened nearshoring capabilities.

Financial terms and conditions

• Enterprise value of EUR 13.5 million, fully funded through internal accruals and cash on hand, with equity value reduced by corporate debt.

• Transaction structured in two tranches: Germany, Poland, Morocco closing July 1, 2024; Canada, China a few months later, subject to condition precedents.

• SCS is expected to add EUR 50+ million in revenues, with about EUR 35 million from Europe and EUR 15 million from China/Canada.

• Additional restructuring investment estimated up to $5 million.

Synergies and expected cost savings

• Morocco plant offers lower labor costs than China and is strategically located for European and U.S. markets.

• In-house injection molding at Morocco and relocation of Polish operations expected to drive future cost savings and optimize cost structure.

• Consolidation of supplier base and increased purchasing power in Europe anticipated.

• Integration of SCS's low-cost manufacturing and engineering expertise expected to drive efficiencies.