For ContiTech and Veyance Technologies, the old axiom that the best things in life are worth waiting for rings true. While the nearly year-long wait to gain the necessary approvals was longer than the top executives of the firms had hoped, the deal was finalized at the end of January. Now the real work begins.
From all appearances, it will be the type of acquisition where all involved will benefit. Heinz-Gerhard Wente, a member of parent Continental A.G.'s executive board and CEO of ContiTech, has maintained all along that the purchase will be one of growth, not restructuring.
Officials say all the time that a deal is “complementary,” but that truly is the case here. ContiTech is strong in Europe and Asia, but lacked a significant presence in North America. Veyance brings that and more, including a sales and distribution network Wente says will stay in place.
ContiTech and Continental are looking to become less dependent on automotive. The vast majority of Veyance's business comes from industrial customers, giving Conti a boost toward its goal of having 40 percent of its business come from non-automotive markets.
There even will be three years of guaranteed labor peace, as the four Veyance plants in the U.S. that once were part of Goodyear's master contract bargaining process agreed last year to extend their contracts two years until 2018.
It's clear that ContiTech in buying Veyance got far from a fixer-upper. Whether former Veyance CEO John Hamilton—who left the firm as planned when the deal closed—was charged by its private equity owner with getting the firm in condition to sell or simply creating the strongest company possible, he made Veyance a business that a firm such as ContiTech would pursue.
Veyance clearly won't be just an acquisition where the purchaser makes all the decisions. Wente said the integration process will mean taking the “best of the best” from two firms with a long history in the rubber business.
Much of the integration work of putting together a business that combined accounts for about $6.2 billion in sales and employs 38,000 worldwide will take place during the next 100 days. That just happens to coincide with Wente's retirement after more than 40 years with Conti.
He can walk away assured that he is leaving not only the world's largest non-tire company, but a firm well positioned for the future.