STOCKHOLM, Sweden—Trelleborg Automotive plans to sell its Fluid Solutions business to Bavaria Industriekapital A.G. to focus on its core anti-vibration products operation.
Bavaria is expected to pay about $38.2 million, based on current working capital, for the unit, a Trelleborg spokesman said. About $25.5 million will comprise cash or cash equivalents. Trelleborg said it expects to take an after-tax loss of nearly $20 million on the divestiture.
An estimated 1,900 are employed at Fluid Solutions plants in Poland, Slovakia, Turkey, the Czech Republic, Spain, Italy, France and Germany. Bavaria didn't say if any layoffs will occur, but did note the present Fluid Solutions management group will remain in place.
The transaction, which needs the approval of German merger control authorities, is expected to close in the second quarter. It's the sixth acquisition in the automotive segment that Bavaria, a German industrial holding company, has made to date.
Bavaria CEO Reimar Scholz said the purchase ranks with two others—Teksid France in 2007 and K+S Group in 2006 —as the firm's biggest to date.
Platform to profit
Fluid Solutions' current management team successfully restructured the business during a difficult 2009 and it's now operating profitably, Scholz said, and Bavaria has been impressed with Fluid Solutions' strong and growing customer base.
“We see the business as a good platform to profit from the growing consolidation in the automotive supplier industry,” he said.
Fluid Solutions—a manufacturer of various components, including hoses used to cool engines and air supply offerings—will operate as a stand-alone company, according to Bavaria. It had sales of about $160 million in 2009 and recorded a loss, though Trelleborg didn't disclose how much the loss was.
Trelleborg Automotive, one of four bus- iness units of parent Trelleborg A.B., has been restructuring the Fluid Solutions unit for some time. Comprehensive measures put in place in recent years to improve the business created an enhanced and sounder operation that will now have the opportunity for greater development under a new owner, said Ro-ger Johansson, business area president of Trelleborg Automotive.
The sale of the business is another step in the company's strategy to focus on selected segments, in this case the firm's large anti-vibration operation—which includes noise, vibration and harshness products along with noise and vibration-damping solutions—for the automotive industry, according to Peter Nilsson, Trelleborg Automotive president and CEO.
He said the company plans to build the NVH business further and strengthen its global leadership position in the automotive sector. When the sale is complete, Trelleborg Automotive will have a work force of about 6,000 operating out of 25 plants worldwide.
Global growth
Trelleborg Automotive has been expanding globally for some time. In April the company created a manufacturing base in Russia when it opened a factory in Nizhny Novgorod that makes anti-vibration products for light vehicles.
The facility was purchased by the company and totally refurbished. It is part of a wholly owned subsidiary Trelleborg set up in Russia in August 2009.
Johansson said the firm hopes to capitalize on a strong market recovery in the country's automotive sector after the segment suffered a substantial drop in 2008 and 2009. He said the size of Russia's market is considerable and expected that about 1.5 million cars a year will be produced locally in the next few years.
More recently, Trelleborg Automotive said it plans to set up a research and development center in Shanghai, China, to offer NVH solutions for light vehicles.
The firm, which employs about 1,100 in China, said the R&D center will include equipment for controlled testing of brakes and engine noise. Using on-site test chambers, the company will be able to simulate the brake noise experienced in driving conditions anywhere across the globe.
The center is expected to be open by the end of 2010. It will include one laser scanner which will enable the company to measure vibration levels of various engine components.
Trelleborg Automotive has five wholly owned manufacturing facilities in China, including one that produces and develops anti-vibration components for light vehicles.