Randoncorp is buying the British brake distributor European Braking Systems (EBS) for 56 million pounds – about R$ 410 million.
The deal, closed through Master Freios – a joint venture between Randon and the American Cummins specialized in producing brakes for heavy commercial vehicles – is one of the largest in the company’s history, valued at R$ 3.6 billion on the stock exchange.
The payment will be in cash – with half of the amount financed in real and the other half in local currency.
With a revenue of R$ 300 million, EBS is a distributor operating in over a hundred countries, but particularly strong in Europe. The company has distribution centers in the UK, Ireland, Romania, Netherlands, USA, and China, and deals with 20,000 SKUs – with a significant portion produced in Asia.
Randoncorp’s CEO, Sérgio Carvalho, said that this acquisition is similar to what Frasle did last year when they acquired the British auto parts supplier Juratek: buying access to new markets.
“We have set a strategy to grow more internationally, especially in stronger economies,” Carvalho told Brazil Journal.
The executive did not disclose expected synergies, but mentioned that they include Randoncorp producing products purchased by EBS from other suppliers until better conditions are obtained to acquire items that Randoncorp cannot absorb in its plants.
With this acquisition, Master Freios expands its distribution to Europe – currently operating in South America and exporting to the USA – and also increases the aftermarket market share in its revenue from 10% to 30%.
Sales to the international market will also see a jump from 14% to 33% of revenue.
“This is the balance we seek: a revenue divided into 40% from local sales, 30% for the international market, and 30% for aftermarket,” said the CEO. “But this can fluctuate according to each market’s conditions.”
Master Freios will also absorb a portfolio beyond brakes, including commercial vehicle control systems (valves, cylinders, and clutch servos).
Master Freios is the result of a JV formed 38 years ago between Randoncorp and the American Meritor. The Brazilian company owns 51% of the business.
“JV is usually said to have a time limit, but we are proving otherwise,” Carvalho said.
(In 2022, Cummins paid US$ 3.7 billion for Meritor.)
Master Freios generates around R$ 1 billion per year and has two factories in Rio Grande do Sul, producing for both local and international operations.
Randoncorp’s CEO mentioned that acquisitions will continue. With low leverage – below 2x even after today’s acquisition – he sees room for growth, especially in North America and Europe.
In July, Frasle – also controlled by Randoncorp – paid R$ 2.1 billion for the Mexican company KUO Refaciones that manufactures a wide range of products from engine parts to brake pads.
Randoncorp’s stock has risen by 5% in the last 12 months.
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
