In a bid to transform itself into a tech company and focus on the existing growth of electronics, connectivity, electric vehicles (EVs) product lines and the 2-wheeler segment globally, Varroc Engineering has signed a securities purchase agreement (SPA) with Compagnie Plastic Omnium SE to divest its 4-wheeler lighting systems operations in the Americas and Europe.
The divestment is part of the company’s strategy to align its resources with the high value and high growth primary markets in China, India, and the two-wheeler sector globally, an official statement from the company said.
The company noted that the € 600 million transaction will see Varroc divesting its lighting system operations in the USA, Brazil, Mexico, Poland, Czech Republic, Germany, Turkey, and Morocco.
The company said that it will continue to operate its China JV and other international 2-wheeler businesses in countries like Italy and Vietnam and global electronics businesses in Poland and Romania while retaining its 4-wheeler lighting operations in Asia.
Tarang Jain, Chairman & Managing Director of Varroc Engineering, said, “Our immediate goal is to be future-ready with continued profitable growth in emerging sectors like the EV and high technology electronics. The divestment of our passenger car lighting operations in the Americas and Europe will be a win-win deal for Varroc and Plastic Omnium.”
Laurent Favre, Chief Executive Officer of Plastic Omnium, said, “Varroc Lighting Systems is a strategic addition to our business that will provide us with an extensive lighting product portfolio, a balanced footprint across best-cost countries and cross-selling opportunities.”
The automobile component company noted that the Indian automobile sector, including 2-wheelers, 3-wheelers, and passenger car segments, is poised to grow at 10-12 % CAGR over the next 4-5 years.
Additionally, with emerging alternative technologies in electric vehicle (EV) mobility, it will be investing in operations and R&D to enhance its shareholders’ value by creating a robust and financially strong operation, ensuring higher return on investments.