Bharat Forge eyeing ThyssenKrupp's forging units

Our Corporate Bureau
13 March 2006

Media reports indicate that Bharat Forge, the second largest automotive forgings manufacturer globally, is in negotiations to acquire at least some of the forging units of German company ThyssenKrupp AG. Neither companies have confirmed or denied these reports.

Other Indian companies like Mahindra & Mahindra and Amtek Auto are also rumoured to be interested in Thyssen's assets.

The automotive division of Thyssen has manufacturing facilities in the US and Europe. While some reports in the US and European media indicate that Thyssen may sell the entire automotive division, other reports suggest that only the US units would be sold.

ThyssenKrupp has made a deal with Mittal Steel to acquire the Canadian steel maker Dofasco if Mittal Steel is successful in its hostile bid for Arcelor. Thyssen would need over $4.5 billion to finance the Dofasco buy out and a sale of its automotive unit is one of the options to raise finance. The automotive division of Thyssen, which notched up revenues of over €6 billion last year, is valued at up to €2.5 billion by stock brokerages.

It is speculated that Bharat Forge is willing to shell out up to $1.5 billion for Thyssen's forging units in the US and Europe. If only the US units are offered the size of the deal would be lower than $500 million, according to unconfirmed reports.

Bharat Forge has been on an acquisition spree over the last few years. The company has acquired forging units in the US, Scotland and Germany. The company also holds a 52 per cent stake in a Chinese forging manufacturer set up in partnership with Chinese auto manufacturer FAW Corp.