Auto components maker Joyson Safety Systems (JSS) merged two of its Indian joint ventures (JV), KSS Abhishek Safety Systems and Takata India, to create a new entity called Joyson Anand Abhishek Safety Systems.
JSS had a JV for KSS Abhishek Safety Systems with Abhishek Industries, while the JV for Takata India was with Anand Group. The tri-party venture now has a shareholding structure of JSS (65%), Anand Group (30%) and Abhishek Group (5%). The deal was valued at ₹1.4 billion (US$20 million).
“This venture is an attempt to marry the two existing ones by synergizing the resources and strategies. What triggered this was the global acquisition of KSS and thereby Takata by JSS,” J Sagar Associates (JSA) partner Pallavi Puri told India Business Law Journal.
The merger is subject to approval of the National Company Law Tribunal. Puri said tri-party JVs were relatively uncommon and typically took place in the manufacturing and real estate sectors.
“Forming a tri-party JV is a task for sure and the most complicated aspect in this one was the exit and management rights which were given to each JV partner. A shareholder (even though minority), due to the value brought to the business and for historical reasons, has been treated at par with a majority shareholder and each partner has a say on important operational aspects, which is a quite a departure from normal JVs.”
“A tri-partite joint venture is significantly more complicated than a bilateral venture,” said Vijay Ravi, senior partner at Kocchar & Co, which was the counsel to Anand Group. “Defining the rights and obligations of the parties (especially relating to events of default and indemnification obligations, dilution of equity stake, transfer of shares, etc.) makes it a complicated exercise.”
JSA advised and assisted JSS on the merger. Besides Puri, partner Upendra Nath Sharma, associate Simranjeet Singh and company secretary Anuj Jain also worked on the deal. The Kochhar & Co team included principal associate Kajal Bhimani Singh and associate Ruchika Adlakha. Khaitan & Co advised Abhishek Industries.
JSS is a US-based, Chinese-owned global supplier of mobility safety systems including airbags, seatbelts, steering wheels, electronic safety systems and child restraints. In 2018, JSS acquired substantially all of the global assets of Japan-based Takata Corporation out of cross-border bankruptcies in the US and Japan, which resulted in the two JVs in India.