FAIRLAWN, Ohio—Continental A.G. has received approval from U.S. Department of Justice to purchase Veyance Technologies Inc. from the Carlyle Group on the condition that it divest Veyance's air spring factory in San Luis Potosi, Mexico.
Meanwhile, the acquisition has been cleared by antitrust authorities in Canada. Decisions by three other regulatory authorities are still pending.
Once the deal is finalized, ContiTech A.G., a division of Continental, will almost double its present size. However, because a few agencies have yet to make a decision, Continental won't close on the deal by year end. It anticipates the transaction will likely close in the early part of 2015. It can close the deal and sell the plant thereafter, a company spokesman said.
While Continental welcomed the two decisions by the antitrust authorities, Heinz-Gerhard Wente, a member of Continental's executive board and CEO of ContiTech, said “we regret that we are not permitted to take over the air springs business in NAFTA. In our estimation, that would have brought clear benefits for the customers.
“We will now look for a buyer as quickly as possible who will provide a secure future for the approximately 500 employees in the plant in Mexico and develop the business further.” The Mexican plant is the only air springs facility that will be sold, as it is the only one that operates within NAFTA, the spokesman said.
Continental will continue to cooperate in every way possible with antitrust authorities “to help in reaching a decision quickly so that our customers and employees know exactly where we stand,” Wente said.
The acquisition is aimed at strengthening ContiTech's industrial operations and will help the company in markets where it's not presently represented, particularly in the U.S. and South America, the firm said. It noted that it will be provided additional opportunities in Canada, China, Australia and South Africa.