Magna International Inc. (TSE: MG.A, MG.B, NYSE “Magna”) and Decoma International Inc. (TSE: DEC.A NASDAQ: DECAF”Decoma”) jointly announced today that they have entered into a non-binding letter of intent respecting the purchase by Decoma of the Magna Exterior Systems group’s (“MES”) European exterior parts operations and Magna’s existing majority interest in Decoma Exterior Trim Inc. (“Trimco”).
This proposed acquisition by Decoma would solidify Decoma’s position as a premier worldwide supplier of a full range of exterior automotive parts and components to the world’s leading automotive manufacturers and is in keeping with Magna’s previously stated objective of restructuring its operating groups along global product lines.
The MES operations are conducted at 7 manufacturing facilities located in Germany, England, Belgium and Brazil. Trimco, of which Decoma currently owns a 40% interest, currently operates 10 manufacturing facilities which are primarily located in Southern Ontario. MES had revenues for the prior 12 month period ended December 31, 1999 of Cdn$611 million (US$412 million). Trimco had revenues for the prior 12 month period ended July 31, 1999 of Cdn$514 million (US$340 million) and Decoma had revenues for the prior 12 month period ended July 31, 1999 of Cdn$901 million (US$598 million).
The terms of the proposed transaction, including agreement as to the fair value of the assets to be transferred and the form of consideration to be paid to Magna, are in the process of negotiation between Magna and Decoma. In connection with the transaction, Decoma’s board of directors has established a special committee of independent directors to review the transaction with the assistance of management. The transaction will be subject to a number of conditions, including the review and recommendation of the proposed transaction by Decoma’s special committee, the approval of final transaction terms by both Magna and Decoma’s boards, required regulatory approvals and the approval of the transaction by a majority of Decoma’s minority shareholders.
Magna, one of the most diversified automotive suppliers in the world, designs, develops and manufactures automotive systems, assemblies and components, and engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks in North America, Europe, Mexico, South America and Asia. Magna has over 59,000 employees in 174 manufacturing operations and 33 product development and engineering centers in 19 countries.
Decoma designs, engineers and manufactures automotive fascias, and related components and plastic body panels and exterior appearance systems for cars and light trucks, principally for automobile manufacturers in North America, Mexico and Europe. Decoma has approximately 5,800 employees in 13 manufacturing and engineering facilities in Canada, the United States, Mexico, Belgium and England.