Tata Technologies (TTL) has agreed to acquire a 100% stake in German automotive engineering services provider ES-Tec GmbH and its subsidiaries (collectively ES-Tec Group) for €75m ($87.9m) in cash.
As per the agreed terms, TTL, a product engineering and digital services firm, will pay the consideration over the next two years.
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This is inclusive of performance-based earn-outs.
TTL expects the transaction to be accretive to its earnings per share from the first full year post-acquisition.
It also projects the acquisition will offer “commercial synergies” with “complementary” offerings.
Through the acquisition, it seeks to expand its talent pool with the addition of over 300 professionals having expertise in systems engineering.
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By GlobalDataCompletion of the transaction is contingent on the satisfaction of standard closing conditions including regulatory approvals.
ES-Tec Group, established in 2006, offers services in connected driving, advanced driver assistance systems (ADAS), and digital engineering.
According to a statement from TTL, the latest acquisition will bolster its growth on a global scale and enhance its ability to provide “future-ready” engineering solutions.
The deal also provides TTL with access to ES-Tec’s automotive innovation hubs, which is expected to serve as a pivotal platform for the company to expand its engineering research and development capabilities.
Additionally, it will enable TTL to strengthen its ties with original equipment manufacturers (OEMs).
MCF Corporate Finance served as the advisor to TTL for this transaction.
Tata Technologies CEO and MD Warren Harris said: “The acquisition of ES-Tec Group is a strategic leap that enhances our ability to deliver end-to-end product engineering solutions across the automotive value chain and represents our commitment to expand our global footprint in accessing innovative engineering capabilities.
“ES-Tec’s technical depth, customer centricity, and regional strength align perfectly with our strategic vision to be the first partner choice for global OEMs navigating the shift towards intelligent, connected, and sustainable mobility.”
TTL noted that the automotive sector is currently experiencing a significant shift, with European manufacturers increasing their research and development efforts in areas such as ADAS/AD, vehicle electrification, and software-centric vehicle architectures.
The European market for engineering service providers is anticipated to surge from €4.5bn in 2020 to €11.7bn by 2030, highlighted the company.
