Tier 1 Automotive Suppliers in Takeover Agreement

Mahle set to acquire a stake in Behr, following simple industrial logic

Two well-known automotive suppliers have agreed on a staged takeover, anticipating what one executive calls “significant additional potential for the future of both companies in the market for complete systems solutions for the power train of modern passenger cars and commercial vehicles.” Mahle Group will begin by acquiring 19.9% of Behr GmbH & Co. this year, and increase its holding to 36.85 early in 2011.

“Simple industrial logic brought us to this step, and opens up great opportunities for our future, allowing us to play in the top league of the automotive supplier industry," explained Prof. Dr. Heinz Junker, chairman of Mahle Group.

The value of the takeover has not been released. The takeover agreement remains subject to antitrust approval. The supervisory boards of both companies have already approved the share agreement.

Both companies are based in Stuttgart, Germany. Mahle Group is one of the world’s largest automotive suppliers, with two business units, Engine Systems and Components and Filtration and Engine Peripherals. Its list of component parts includes piston systems, cylinder components, valve trains, and air and liquid management systems.

Behr GmbH specialized in automotive air conditioning and engine cooling systems for passenger and commercial vehicles.

In addition the stage stock acquisition, the agreement between the two firms allows Mahle tp purchase additional shares from the current shareholders by exercising a call option starting in 2013, so it has an option to gain an outright majority of Behr. Current Behr shareholders will have an option sell their shares to Mahle in stages over ten years.

According to Prof. Dr. Heinz Junker, chairman of Mahle Group, "Mahle's participation in Behr opens up significant additional potential for the future of both companies in the market for complete systems solutions for the power train of modern passenger cars and commercial vehicles. The product portfolios complement each other and fit together excellently.”

Among the potential advantages of combining the groups’ product porfolios, Junker listed opportunities in exhaust systems, alternative drive systems for hybrid and electric or fuel-cell vehicles.

“Technologically, Behr already has a leading position,” Junker said. “After the closing, we will quickly begin to determine in joint working groups the potential for synergies in products and markets for the significantly complementary product divisions, as well as potential synergies in other functions of the companies. We want to work on par with each other in order to find best practice solutions and set benchmarks," Junker concluded.

Horst Geidel, Chairman of the Behr Supervisory Board, accentuates: "The share concept with Mahle combines two goals in an ideal manner: it stabilizes Behr on the capital side, with an increase in equity to over 20 percent, and it provides a long-term path to a new corporate structure. The two companies are combining their strengths and securing their position in the group of global leading automotive suppliers. The Behr family shareholders, as well as BWK, have approved the concept and see it as an excellent prerequisite for successful development of the company."

Behr chairman Dr. Markus Flik said, “The cooperation with Mahle in complementary product divisions provides additional growth potential for Behr for engine-mounted components, such as exhaust gas and integrated charge air coolers. Together, we can calculate, design, and manufacture modules and systems more extensively for our customers in these areas. In doing so, we contribute significantly to reducing emissions and consumption in passenger cars and commercial vehicles."

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