Samvardhana Motherson, an Indian conglomerate and major auto parts group, has partnered with US investment fund KKR to negotiate with Marelli on the terms and conditions of support ahead of the second round of bidding, set for mid-April. In fact, KKR is also Marelli's parent company.
Motherson Sumi Systems, established in 1986 as a joint venture with Sumitomo Wiring Systems, belongs to the Motherson group. It is India's largest auto parts maker and is involved in the production of wiring harnesses and other electrical components. According to research company MarkLines, Motherson Sumi had sales of $8.112 billion in fiscal 2020, the 28th among global car parts makers.
It has offices around the world, including in Europe and the US. Marelli, formerly Calsonic Kansei, has long had a close relationship with the parts makers under the Motherson umbrella, including a tie-up to develop sensor and lighting technologies.
While Motherson teamed up with KKR in the first round of bidding, several other players, including funds from Japan and elsewhere, also appear to have made bids. By the second round, each bidder will have conducted its due diligence on Marelli and will be ready to negotiate the terms of its support, including restructuring measures.
In 2017, KKR acquired Calsonic Kansei, the Marelli predecessor, which was under Nissan at the time. In 2019, Calsonic Kansei merged with Magneti Marelli, which was the auto parts division of Fiat Chrysler Automobiles (now Stellantis) in Europe and the US, and changed its name to Marelli.
But the merged company failed to move forward with the restructuring of its excessive production plants, and its cash flow dried up. In addition, the pandemic hit in 2020, and Nissan, a major client, had to repeatedly cut back its automobile production.
Last month, Marelli applied for Turnaround ADR (alternative dispute resolution), a type of out-of-court debt restructuring and settlement system. Its total liabilities at the time amounted to 1 trillion yen ($8.2 billion).
