Delphi plans to buy unit of FCI Group

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DETROIT (May 25, 2:45 p.m. ET) – Troy, Mich.-based Delphi Automotive plc said it is open to more acquisitions after announcing May 24 that it has entered “exclusive talks” to acquire a unit of FCI Group from Bain Capital for about $958 million.

The auto supplier said it made an offer to buy FCI Group’s motorized-vehicle division for about $958 million. The transaction is expected to close by the end of 2012.

CEO Rodney O’Neal had said Delphi was willing to spend as much as $1 billion on an acquisition, and on May 24 he did not rule out further deals. He is also looking at paying dividends, buying back shares and funding the growth of the business, he said by telephone interview. Delphi had $1.4 billion of cash on hand at the end of March.

“We’ll look at a multitude of ways to get cash and value back to the shareholders, and acquisitions are just one,” O’Neal said. “That’s still possible, but there is nothing currently on the radar screen. It’s possible, but unlikely.”

Delphi expects the FCI Group acquisition to add about 24 cents to per-share earnings in 2013, excluding costs related to the acquisition. Its stock closed Thursday at $27.70 and is up 29 percent this year.

FCI’s motor-vehicle division will become a part of Delphi’s electrical and electronic architecture segment. The unit makes interconnection systems for safety restraints, powertrains and electrical vehicles. The British company’s sales totaled about $1.08 billion in 2011.

O’Neal said that the deal will strengthen the company’s connector product portfolio and that Delphi will be “better positioned to further drive growth in electronic content in motor vehicles.”

The acquisition will broaden Delphi’s relationship with automakers around the world, particularly in Europe and Asia.

Gillingham, England-based FCI Group has more than 14,000 employees in 30 countries.

“This is a rare opportunity,” O’Neal said on the call. “You don’t catch assets like this in this space.”