Tata Technology Set to Acquire Germany's ES-Tec Group for Enhanced Automotive Engineering Involvement
In a significant move, Tata Technologies Ltd, a leading provider of product engineering and digital services, has agreed to acquire ES-Tec GmbH and its subsidiaries for up to €75 million. This all-cash deal will be executed through Tata Technologies' Singapore arm, Tata Tech Pte Ltd.
Founded in 1981 by Rolf Alter, who managed the company for over 40 years until his retirement, ES-Tec specializes in high-end automotive engineering services. The company boasts strong expertise in Advanced Driver-Assistance Systems (ADAS), connected driving, and digital engineering.
The acquisition is expected to strengthen Tata Technologies' footprint in Germany, home to some of the world's largest automakers. With this move, Tata Technologies aims to expand its capabilities and international presence.
ES-Tec Group posted revenues of €36 million in 2024 and employs over 300 people. The deal consideration includes performance-linked earn-outs and is expected to close by December 2026, subject to regulatory approvals. The deal is expected to be earnings-per-share accretive from the first full year of operations.
European original equipment manufacturers (OEMs) are accelerating R&D spending on ADAS, electrification, and software defined vehicles. The engineering services provider (ESP) market in Europe is projected to expand from €4.5 billion in 2020 to €11.7 billion by 2030, providing a promising growth landscape for Tata Technologies.
TPG, the private equity firm that backed Tata Technologies, logged off from Indian engineering firm with blockbuster returns, scored another rich harvest from recent India bet, and spun abnormal returns via quick India exit move. This acquisition marks another strategic move for Tata Technologies, further cementing its position in the global engineering services market.
It's worth noting that Tata Technologies had a spectacular listing on the Indian bourses in November 2023, with its IPO being fully covered within hours on the first day. This performance contrasts with that of another Indian engineering firm, FedFina, which has had a disappointing run.
The acquisition of ES-Tec GmbH is expected to enhance Tata Technologies' offerings in the automotive sector, as the company currently caters to manufacturing clients across automotive, aerospace, and industrial heavy machinery sectors. The deal is set to propel Tata Technologies towards its vision of being a global leader in engineering and digital services.
