Sumitomo Wiring Systems Sells 4.4% Stake in Samvardhana Motherson for Rs 3,633 Crore

In a significant development, Japanese auto component manufacturer Sumitomo Wiring Systems (SWS) has divested a 4.4% stake in Samvardhana Motherson International Ltd (SAMIL), a leading Indian automotive component supplier. The stake sale, valued at approximately Rs 3,633 crore, was executed through open market transactions on the National Stock Exchange (NSE).

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Details of the Stake Sale

According to the bulk deal data available with the NSE, SWS sold a total of 30 crore shares, representing 4.43% of SAMIL's total outstanding shares. The shares were offloaded within the price range of Rs 121.03 to Rs 121.25 per share, resulting in a combined deal value of Rs 3,633.20 crore.

Impact on Shareholding Pattern

Following the stake sale, SWS's shareholding in SAMIL has declined significantly. The company's shareholding has reduced from 14.15% to 9.72%, marking a notable change in the ownership structure. Consequently, the combined shareholding of the promoters and promoter group entities in Samvardhana Motherson International has also decreased from 64.78% to 60.35%.

Historical Context

As of December 2023, SWS and its wholly-owned subsidiary, HK Wiring Systems Ltd (HKWS), jointly held a 14.32% stake in SAMIL. This divestment marks a continuation of SWS's gradual reduction of its shareholding in the Indian automotive component supplier.

Uncertain Buyers

At the time of reporting, the identities of the buyers who acquired SAMIL's shares from SWS remain undisclosed. Further details regarding the purchasers are expected to emerge in the coming days.

Stock Market Reaction

The news of Sumitomo Wiring Systems' stake sale had an immediate impact on the stock market. On Wednesday, shares of Samvardhana Motherson International witnessed a decline of 3.83%, closing at Rs 120.65 apiece on the NSE.

Previous Stake Sale

This divestment by SWS follows a similar transaction in March 2023, when the company sold a 3.4% stake in Samvardhana Motherson International for Rs 1,612 crore.

Historical Partnership

Sumitomo Wiring Systems has a long-standing relationship with Samvardhana Motherson International, dating back to the company's Initial Public Offering (IPO) in 1993. SWS was the first joint venture partner of Motherson and a promoter of SAMIL since its inception.

Restructuring and Demerger

In 2020, Motherson Group, the parent company of Samvardhana Motherson International, underwent a restructuring exercise. As part of this restructuring, the Domestic Wiring Harness (DWH) business of the then Motherson Sumi Systems Ltd (MSSL) was demerged into a new listed company, Motherson Sumi Wiring India Ltd.

This restructuring was undertaken to address the request of Sumitomo Wiring Systems, which sought to focus its participation on the DWH business in India, its core area of interest. Consequently, all auto components and allied businesses were brought under the group firm, Samvardhana Motherson International Ltd.

The divestment of a 4.4% stake in Samvardhana Motherson International by Sumitomo Wiring Systems marks a significant development in the Indian automotive component industry. This transaction underscores the evolving dynamics of the sector and the strategic decisions taken by key players to optimize their portfolios and focus on core areas of expertise.