Conglomerate Grupo IMSA has sold its share of a Mexican and South American automotive battery business to joint venture partner Johnson Controls.
The joint venture company is the leading automotive battery producer in Mexico and South America and reported fiscal 2003 sales and operating income of $429 million and $88 million, respectively. Johnson Controls has been the major customer of the joint venture since it was formed in 1998.
Johnson Controls will pay approximately $525 million, including the assumption of debt, for the remaining 51% of the company. The transaction, subject to the usual regulatory approvals, is expected to be completed in autumn 2004 and is expected to provide Johnson Controls with additional revenue of $250 million in fiscal 2005. The investment is expected to be funded initially with short-term debt.
The business operates four manufacturing plants and one lead recycling plant in Mexico, as well as a manufacturing plant in Brazil.
In addition to supplying Johnson Controls, it is a major supplier to the Mexican and South American battery aftermarkets, including hypermarkets, wholesalers and original equipment service channels.
It supplies batteries under the leading brands LTH and America in Mexico and Heliar in South America.
Approximately 20% of sales are to the original equipment market, which includes such customers as Ford, DaimlerChrysler, Volkswagen and Nissan, and 80% to the aftermarket – the Walmart, AutoZone, Costco and Carrefour chains, among others. The joint venture has 3,100 employees.
“Johnson Controls position as market leader in the US and Europe perfectly complements our leadership in Mexico and South America,” said Felipe Muzquiz, president of the joint venture.