FAIRLAWN, Ohio—Continental A.G. has finalized its acquisition of Veyance Technologies Inc. for about $1.58 billion after it received approval from the Brazilian antitrust authority, the Council for Economic Defence, on Jan. 29.
Brazil's approval—which comes with some conditions—eliminates all obstacles in Continental's path to purchase the hose, conveyor belt and transmission belt manufacturer from Carlyle Group. ContiTech A.G., a division of Continental, will almost double its North American revenues with Veyance in the fold.
Continental received conditional approvals from the U.S. and Mexico in December. It received the go-ahead from countries in Europe earlier in 2014. The condition requires the company to divest its air springs business in the NAFTA region, which includes an air springs plant in Mexico and a technical office in Ohio.
Veyance has a strong presence in the U.S, where it generates half its sales, along with Latin America, Africa, China and other countries in Asia. About 90 percent of its revenues come from industrial markets.
“By integrating Veyance in our ContiTech division, we are expanding our global position in rubber and plastics technologies,” said Elmar Degenhart, chairman of Continental's Executive Board in Hanover, in a statement. “In addition, this acquisition will bring Continental a significant step closer to its strategic goal of further increasing the proportion of industrial and end-customer business in its sales,”.
In 2013, the combined sales of ContiTech and Veyance totaled about $6.1 billion. Together, the companies employ about 38,000 globally.
“Veyance will complement ContiTech in markets in which we have been underrepresented up until now,” said Heinz-Gerhard Wente, a member of Continental's executive board and CEO of ContiTech. He said it also will expand its industrial business significantly and “enable ContiTech to achieve a share of almost 60 percent of its sales outside the automotive original equipment sector.”
Degenhart said Continental financed the acquisition entirely from liquid funds and available lines of credit, adding that Veyance will make an immediate positive contribution to the company's profitability.