|On a long drive
Mumbai, Aug. 18: Tata Technologies (TTL) today offered to buy UK’s INCAT International for Rs 411 crore.
Like TTL, INCAT specialises in offering engineering and design services for aerospace and automobile companies and is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. It is, however, almost three times larger than TTL by revenue.
The Tata offer represents a 4 per cent premium on INCAT stock’s August 17 closing price of 211.5 pence. The board of the UK firm has approved and recommended the acceptance of the offer to shareholders.
INCAT, established in 1989, had a turnover of Rs 507.32 crore and an operating profit of Rs 18.65 crore for the year ended August 31, 2004.
On the other hand, Tata Technologies had revenues of Rs 180 crore and an after-tax profit of Rs 7.72 crore for the financial year ended March 31, 2005.
More than 650 employees at INCAT service customers in North America, Europe and Asia-Pacific in the automobile, aerospace and engineering industries ' segments in which Tata Technologies also specialises.
Praveen Kadle, executive director at Tata Motors, of which TTL is the engineering and design software subsidiary, said the acquisition fits into the long-term goals of the company. “There will be some right-sizing of on-shore and off-shore activities of the two entities,” he added.
TTL’s offshore strengths in engineering automation will combine with the high-end onshore skills of INCAT to deliver international customers a range of services at a single point.
“The prospect of INCAT joining forces with TTL represents an exciting opportunity to advance our strategic aims. We are experiencing strong organic growth, which we wish to complement with targeted acquisitions,” said Patrick McGoldrick, CEO of Tata Technologies.
McGoldrick believed the combined entity would be a formidable global player in engineering and design services. It will be better placed to meet the demands of customers.
INCAT chairman Ross Bunce was equally upbeat. “We believe the offer provides our shareholders with certainty and value. Tata Technologies’ business complements our own. The enlarged group should benefit from the greater financial resources and presence that will come by being a part of the Tata group.”
With approximately 2000 employees, TTL works for customers in India, the US, Europe, and Asia-Pacific. Many of them are big names in the global automobile industry.
INCAT’s acquisition will give it greater scale and stronger market muscle in North America, Europe and Asia. The enlarged group will have the massive reach that is considered necessary to offer a wide range of services.