Amtek Auto Limited stands to gain new forging capacity it sees as an extension to its Indian operations, and new iron casting technologies that add to its current holdings.

Amtek Buying Asahi Tec’s Forging, Casting, Machining Businesses

April 28, 2015
Purchase adds synergistic auto components businesses, new access to Japan, Thailand, China Expanding global portfolio Numerous new OEM customers Sale offers “sustainable growth”

India’s Amtek Auto Limited has an agreement to buy six auto parts operations from Asahi Tec Corporation, a Japanese conglomerate that operates in numerous industrial, refining, and recycling sectors. The acquired businesses, though not listed in detail, are forging, iron casting, and machining operations, three in Japan, two in Thailand, and one in China.

Asahi Forge Corp., the parent of Asahi Forge of America Corp., is an unrelated company and not connected to the sale.

Amtek Auto did not report the value of its purchase, though its senior managing director and global CEO John Flintham noted in a televised interview that the “share purchase agreement” would be completed by the end of May, at which point the financial details would be made clear.

He also said the additional operations would add to the Amtek Auto’s earnings in the coming fiscal year. The six companies had revenues totaling $375 million in the most recent 12-month cycle, Amtek noted.

Amtek has been assembling a global portfolio of auto parts manufacturing businesses over the past three years, including forgers Neumayer Tekfor Group in 2013 and Germany’s Scholz Edelstahl earlier this year. It said the Asahi Tec assets produce automotive crankshafts, front axle beams, cylinder blocks and heads, turbocharger housings, and other components for engine and suspension systems for automotive, commercial vehicle, and construction equipment production. The six businesses have over 1,500 employees.

Among the OEMs supplied by the Asahi Tec businesses are Caterpillar, Hino Motors, Mitsubishi Fuso, Mitsubishi Heavy Industries and Mitsubishi Motors. “The acquisition provides a strategically compelling manufacturing platform with access to additional high-profile OEMs in new regions,” Amtek announced.

The product portfolio of the acquired business is seen as “highly synergistic” to that of the Amtek Group, producing engine, suspension and non-auto hydraulic components. In addition, Amtek boasted it would gain access to advanced technologies for front-axle beams and crankshafts that will complement its Ahmednagar Forgings’ existing business. Also, Asahi Tec’s technology and manufacturing capabilities for block and head castings will complement Amtek India’s casting operations.

Flintshire, in the same interview, pointed out that Asahi Tec will be Amtek’s “second transformational acquisition in the last two years. We did Tekfor a couple of years ago and that transformed our European operations and North American operations. This has gone to south Asia… our first entry into Japan.”

The executive called Asahi Tec’s Japanese business “one of the world’s leading manufacturing process technology companies and we expect the same synergies to be across our Indian units from process technology point of view. They are exactly in the same market that we are, so it’s highly synergistic: casting, forging and machining. We also get access to Thailand, and also relatively low-cost entry into China, which is the world’s biggest automotive market.”

The buyer further emphasized the revenue opportunities available from the Asahi Tec business, particularly from the commercial vehicle and construction equipment segments. In particular, the new operations are seen strengthening Amtek Auto’s position in the turbocharger market.

According to Asahi Tec, the asset sale is prompted by the need for those operations “to pursue sustainable growth,” to compete more effectively in Japan and globally. It said, “the companies will be able to utilize the global business foundation of the Amtek Group, and it is expected that brings a synergy effect to them.”