This acquisition by Decoma will solidify Decoma’s position as a premier global supplier of a broad range of exterior automotive parts and components to the world’s leading automotive manufacturers. Commenting on the agreement, Alan J. Power, the President and Chief Executive Officer of Decoma noted, “This transaction, together with Decoma’s recent Conix acquisition, are important steps in the development of our Company. The transaction will provide Decoma with expanded geographic markets, manufacturing capabilities, product offerings and customer relationships while also providing opportunities for improved operating efficiencies, technology sharing and cost savings”.
The MES operations to be acquired by Decoma are conducted at manufacturing facilities located in Germany, England and Belgium. Trimco, of which Decoma currently owns a 40% equity interest, operates manufacturing facilities which are located in Southern Ontario. As at July 31, 2000, MES and Trimco had combined assets of approximately Cdn$540 million. For the 12 months ended July 31, 2000 they had combined revenues of approximately Cdn$1.2 billion.
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Subject to currency and other closing adjustments, the aggregate purchase price payable to Magna is Cdn$300 million, to be satisfied by the issuance of approximately 8.33 million Class A Subordinate Voting Shares of Decoma priced at $12 per share and 2 million 5.75% convertible, redeemable, retractable preferred shares of Decoma at an issue price of Cdn$100 per share. The preferred shares are convertible into Class A Subordinate Voting Shares at a conversion price of Cdn$13.20 per share. In addition, Decoma will assume the debt of MES and Trimco owing to Magna at closing. As at July 31, 2000 this debt was approximately Cdn$265 million.
In May, 2000, Decoma’s board of directors appointed a special committee of independent directors to oversee on behalf of Decoma a review of the MES and Trimco businesses and the negotiation of the purchase agreement. Following an extensive review and the receipt of a valuation of MES and Trimco and a fairness opinion in respect of the transaction from an independent financial advisor, the Special Committee unanimously recommended the approval of the transaction to Decoma’s board of directors. Decoma’s board of directors, following the recommendation of the Special Committee, has unanimously recommended that shareholders approve the transaction.
The transaction is subject to the approval by Decoma’s minority shareholders as well as other customary conditions. A proxy circular describing MES, Trimco and the terms of the transaction will be mailed to Decoma shareholders shortly in connection with the Annual and Special Meeting of Shareholders of Decoma scheduled for December 6, 2000. The transaction is expected to be completed in early January 2001.
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 166 manufacturing operations and 32 product development and engineering centres in 19 countries.
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By GlobalDataDecoma 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.
