Lear Corporation has agreed with International Automotive Components, its joint venture with WL Ross and Franklin Mutual Advisers, to exchange “substantially all” of its European interiors systems division for a 34% equity interest in IAC.
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“The combined European interior operations of Lear and Collins & Aikman represents a large and well capitalised enterprise in Europe, providing a solid platform for improving ongoing operating performance,” said Lear chairman and chief executive officer Bob Rossiter in a statement.
“We have been focused on developing a solution to address operating challenges in this segment and we believe the European transaction is a positive development for our customers and our shareholders.
“We also are continuing to focus our attention on a solution for our North American interiors business.”
ISD Europe operations included in the transaction consist of nine manufacturing facilities in five countries, generating about $US750m in annual sales, that supply door panels, overhead systems, instrument panels, cockpits and interior trim to various vehicle manufacturers.
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By GlobalDataIAC was formed to acquire the former European interiors operations of Collins & Aikman, which was completed on 31 May this year.
The transaction is in line with a framework agreement in October 2005 to explore strategic opportunities in the automotive interior components sector.
In connection with this ISD Europe transaction, Lear expects to book a loss on sale of approximately $40m on completion.
In a separate statement, IAC said European anti-trust clearance has already been obtained and completion is expected before 30 September.
Chairman Wilbur Ross said: “The new company will be a major factor in Europe with first or second place market share in each of its core products.
“Since our Plascar affiliate is also the leader in Brazil, our next geographical targets will be in North America and Asia.”
