By Liz White, UT staff
Southfield, Michigan-Lear Corp. has signed a definitive agreement with International Automotive Components Group llc, its joint venture with WL Ross & Co. llc and Franklin Mutual Advisers llc, under which Lear will contribute most of its European Interiors Systems Division (ISD Europe) to IAC in exchange for a 34 percent ownership stake in the JV.
The move has been on the cards since the IAC JV was first set up in Nov 2005, to acquire the 14 plants comprising the European interiors business of Collins & Aikman. That deal was completed at the end of May this year. "The combined European interior operations of Lear and Collins & Aikman represents a large and well capitalised enterprise in Europe, providing a solid platform for improving ongoing operating performance," commented Bob Rossiter, Lear chairman and ceo, in Lear's announcement of the deal.
The US automotive interiors business has been in turmoil in the past year or so, with Collins & Aikman going bankrupt, and other giants in the sector such as Visteon and Delphi suffering financial challenges. In this context, Rossiter said that Lear has looked to "developing a solution to address operating challenges in this segment."
This European transaction is "a positive development for our customers and our shareholders," and Lear continues to seek "a solution for our North American Interiors business," the Lear ceo continued.
In the current transaction, Lear will donate ISD Europe operations-nine plants in five countries with about $750 million in annual sales. These operations make door panels, overhead systems, instrument panels, cockpits and interior trim to various original equipment manufacturers.
Lear commented that the deal is consistent with the agreement it signed in October 2005 with WL Ross and FMC to explore strategic opportunities in the automotive interior components sector.
Automotive supply giant Lear said it expects to suffer a loss of about $40 million on he transaction, which is expected to be finalised in the third quarter of 2006.
Seat maker Lear says it is one of the world's largest suppliers of automotive interior systems and components, providing complete seat systems, electronic products and electrical distribution systems and other interior products. The group has annual net sales of $17100 million, and has 115 000 employees at 282 locations in 34 countries.