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Motherson Sumi restructuring: promoter holding will rise, minority shareholders to lose out

The swap ratio of 5.1:1 for the SAMIL-MSSL merger points to a valuation that’s perhaps too high. It is good for the promoters but at the expense of the minority shareholders. The high valuation multiples fetched by the group are unjustifiable, given the future demand outlook and the peer multiples.
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13 Jul 2020 6 Mins Read 1 comments
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The board of Motherson Sumi Systems Limited (MSSL), a global auto-ancillary player, has approved a reorganisation plan. The domestic wiring harness (DWH) business will be demerged from MSSL, which will merge (excluding DWH) with the unlisted holding company, Samvardhana Motherson International Limited (SAMIL). The management believes that the reorganisation, once done, will have three benefits — simplification of group structure,
will be high friction to the growth expected by the management going forward. Therefore, it could be concluded that the valuation may be a joyride for the promoters, but will be detrimental to the minority shareholders. ( The author is a Sebi-registered independent research analyst. He can be reached here .) ( Graphics by Mohammad Arshad)
The board of Motherson Sumi Systems Limited (MSSL), a global auto-ancillary player, has approved a reorganisation plan. The domestic wiring harness (DWH) business will be demerged from MSSL, which will merge (excluding DWH) with the unlisted holding company, Samvardhana Motherson International Limited (SAMIL). The management believes that the reorganisation, once done, will have three benefits — simplification of group structure, will be high friction to the growth expected by the management going forward. Therefore, it could be concluded that the valuation may be a joyride for the promoters, but will be detrimental to the minority shareholders. ( The author is a Sebi-registered independent research analyst. He can be reached here .) ( Graphics by Mohammad Arshad)

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