Bharat Forge to take over leading axle manufacturer AAM India Manufacturing in massive Rs 5,445m deal

In a landmark move that cements Bharat Forge’s position as a dominant player in the automotive components sector, the company announced its acquisition of AAM India Manufacturing Corporation Private Limited (AAMIMCPL), a leader in axle manufacturing for commercial vehicles. This deal is poised to accelerate Bharat Forge’s growth trajectory, expanding its footprint in the highly competitive light, medium, and heavy commercial vehicle sectors.

The acquisition, valued at an impressive Rs. 5,445.30 million, was confirmed by Bharat Forge in an official filing with the Bombay Stock Exchange (BSE: 500493) and the National Stock Exchange (NSE: BHARATFORG) on 17 October 2024. The move marks a significant shift in Bharat Forge’s business strategy, enabling it to diversify its product offerings while increasing its presence in key manufacturing hubs, including Pune and Chennai.

The acquired company, AAMIMCPL, has a formidable reputation in India’s axle manufacturing landscape, servicing a broad spectrum of vehicles ranging from passenger buses to heavy-duty trucks. Established in 2008 as a subsidiary of the US-based American Axle & Manufacturing Holdings, Inc. (AAM), the firm has been instrumental in bolstering India’s commercial vehicle industry. With manufacturing facilities in both Pune and Chennai, along with a dedicated Engineering and Development Centre in Pune, AAMIMCPL is a well-established entity, having recorded a turnover of Rs. 1,585.86 crore in FY 2023-24.

A strategic fit for Bharat Forge’s expansion plans

Amit Kalyani, Vice Chairman and Joint Managing Director of Bharat Forge, expressed the company’s excitement about the acquisition, highlighting that AAMIMCPL’s technical expertise and its established client base would significantly enhance Bharat Forge’s capacity to scale its operations. He noted that this acquisition aligns perfectly with Bharat Forge’s long-term goal of diversifying its product portfolio and penetrating new markets. This move also strengthens the company’s foothold in India’s fast-growing commercial vehicle segment, an area that is poised for rapid expansion in the coming years.

Meanwhile, David C. Dauch, Chairman and CEO of American Axle & Manufacturing, described the transaction as a critical step towards refocusing AAM’s global priorities, particularly in the areas of hybrid and electric vehicles. Dauch emphasised that the sale would not only streamline AAM’s operations but also provide financial flexibility for the company to explore new technological innovations.

Regulatory approvals and next steps

The acquisition is currently awaiting approval from the Competition Commission of India (CCI), with the transaction expected to close within 120 days of receiving the green light from the regulatory body. Bharat Forge has been meticulous in ensuring that all legal and procedural requirements are met, in line with SEBI’s stringent disclosure regulations. The deal is set to be finalised via a cash transaction, ensuring that Bharat Forge gains full control of AAMIMCPL’s manufacturing operations and intellectual assets.

Industry experts weigh in on the acquisition

Market analysts view this acquisition as a bold move that could substantially increase Bharat Forge’s market share in the commercial vehicle sector. They believe that this acquisition will not only bring new technological capabilities but also position the company to capitalise on the growing demand for high-quality automotive components in India and beyond. Experts noted that Bharat Forge’s strategy of acquiring well-established firms such as AAMIMCPL gives it an edge over competitors by reducing the lead time in entering new markets and adopting new technologies.

Future outlook for Bharat Forge

Bharat Forge has long been recognised as a trailblazer in the automotive components industry, and with this acquisition, the company is set to accelerate its momentum. The addition of AAMIMCPL’s axle manufacturing business to its portfolio enables Bharat Forge to offer a more comprehensive suite of products to its customers. As the global automotive sector shifts towards electric and hybrid vehicles, Bharat Forge’s enhanced product offerings, coupled with its robust manufacturing capabilities, position it well for future growth.