The Ruia group on Monday announced its acquisition of a majority stake in Henniges Automotive Grefath of Germany, a liquidated but operational company which manufactures automotive sealing systems and supplies to auto majors. The Indian corporate pipped a Turkish and a German company which were also in the race for acquiring this company.

Addressing a joint press conference with Juregen Hein, director of the acquired company, and Wolf Von Der Fecht, administrator of the company, Pawan Kumar Ruia, group Chairman, said that the deal has been funded through a mix of a credit line extended by the administrator, an advance given by four automobile majors (original equipment manufacturers) as well as internal accruals. Mr. Ruia said the cut-off date had been fixed as October 15. The acquired company has been renamed Draftex.

Special purpose vehicle

While the Ruia group will hold 60 per cent of the equity through a special purpose vehicle (SPV), Mr. Hein will hold 15 per cent and Mr. Fecht 25 per cent. The Ruia group has a call option on the unacquired portion. This is the second overseas acquisition and also the second automotive sealant buyout by the Ruia group. The first one Schelgel, U.K., was bought in 2008. He said that plans were afoot for creating a holding company for all the sealing outfits under the Ruia group, which sees this as a big emerging business.

In response to a question, Mr. Fecht and Mr. Hein told The Hindu that Mr. Ruia was among those three short-listed for the acquisition. The German company has a turnover of €84.9 million in 2008.

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