Hero Cycles, the world's largest cycle manufacturer, has acquired 60 percent stake in German bicycle company MIFA for 15 million Euros or Rs 800 crore.
The company will be spending an additional 4 million Euros as capital expenses in restructuring the acquired company.
"The deal is worth 19 million Euros. 15 million euros for 60 percent stake and additional 4 million Euros for capitalexpenses in restructuring the acquired company," sources in the company said.
The company, however, has the option to further increase the stake in MIFA in future.
Hero in a statement said, "this is a first of its kind partnership in the bicycle space globally, with an Indian company providing its cost efficient manufacturing base and supply chain to a European company with critical technology and access to the lucrative European market, especially in e-bikes."
MIFA, with revenues of around 100 million Euros, is a specialist in the mass market bicycle segment in Europe. The company has recently made headways in the e-bike segment in Europe, with its 'Grace' brand of e-bikes.
This acquisition also gives Hero Cycles access to the critical Electronic Drive Unit (EDU) technology, used in e-bikes.
"Not only would Hero Cycles provide a manufacturing baseto MIFA, but also introduce high quality bikes in the Indianmarket using MIFA's German engineering expertise," Hero CyclesCo-Chairman and Managing Director Pankaj Munjal said.
He said this transaction is only a first step in HeroCycle's ambition to become a leading global cyclemanufacturer, not only by volume but also by value.
"Hero Cycles continues to look at acquisition andpartnership opportunities across the globe which fit into ourstrategy of serving customers across all bike segments andprice points," he said.
Talking about the transaction structure, Munjal saiddefinitive agreements has been signed with MIFA and thecompany is hopeful of closing the transaction in about sixmonths. However, the operational integration between the twocompanies will commence immediately,
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Updated Date: Aug 25, 2014 08:21:04 IST