DETROIT - In a major expansion of its automotive business, Collins & Aikman Corp., a leading carpeting and upholstery supplier, said it will acquire Larizza Industries Inc., the parent firm of Manchester Plastics, for $174 million. Collins & Aikman, based in Charlotte, N.C., said it will pay $6.50 cash per share for Larizza's outstanding stock, or $144 million. In addition, the company will pay off about $30 million of Larizza debt.
The deal, announced Sept. 26, is subject to the approval of Larizza shareholders but already has been accepted by Ron T. Larizza, the chairman and chief executive officer who controls slightly more than 50 percent of the company's stock.
``We believe this transaction maximizes shareholder value while providing the company with an excellent platform for future growth,'' Larizza said in a statement issued from company headquarters in Troy, Mich.
The deal is scheduled to be completed in January, after which Ron Larizza will act as a consultant to the company. Edward W. Wells, president of Manchester Plastics, will continue to run the molding operation, Collins & Aikman said.
Larizza has returned to profitability in recent years after going through a painful restructuring process earlier this decade. The company racked up combined losses of more than $90 million during the 1989-91 period.
Through the first six months of 1995, Larizza reported profit of $9.5 million on sales of $110.6 million. In 1994, the company reported profit of $16.4 million on sales of $169.3 million.
Thomas E. Hannah, chief executive officer of Collins & Aikman, expects sales at Manchester Plastics to ``grow rapidly''during the next several years because of new business booked by customers General Motors Corp., Ford Motor Co., and others.
By the end of the decade, Manchester's average sales content per vehicle built in North America should reach nearly $20, up from the current $8 average, Hannah said.
Manchester makes a variety of interior trim, including door panels, headrests, consoles and instrument panel parts and has eight plants in the United States and Canada.
The company uses a variety of processes, including injection and compression molding, rotocasting, vacuum forming and polyurethane foaming.
The company ranked 17th with 1994 injection molding-related sales of $169.3 million in Plastics News' April 1995 list of top North America injection molders.
Last year, the Automotive Products unit of Collins & Aikman accounted for about half the company's total sales of $1.54 billion. In automotive, the company operates along five key product lines: seat fabrics, floor carpets, floor mats, luggage compartment trim, and convertible top systems sold under the Dura name.
Hannah, in a statement, also said Collins & Aikman is eager to develop a European base for its automotive business and the acquisition of Larizza will help on that front.
The company already is expanding its international business at a rapid pace.
In October, Collins & Aikman is scheduled to start production of convertible top systems for Chrysler Corp. at a new plant in Toluca, Mexico. Last year, the company opened a new automo-tive carpet plant in Queretaro, Mexico, to supply Chrysler, Nissan and General Motors.
In November, the company is set to begin production of carpeting at a new plant in Kapfenburg, Austria, for the Chrysler minivan and Jeep Cherokee. Collins & Aikman officially marked its entry into the European market earlier this year when it began shipping convertible tops to Alfa Romeo from a plant in Michigan.
The Collins & Aikman acqui-sition of Larizza continues a trend among top parts suppliers toward higher levels of systems integration - the ability to provide more of the total car interior from a single source - and expanded global reach.
In July, Lear Seating Corp. announced it would acquire Automotive Industries Inc., a major supplier of automotive trim, in a $626 million deal.
Large suppliers of interior trim and seating have the option of manufacturing the entire system package themselves or purchasing some components from subcontractors, according to Ron Buttarazzi, an auto parts analyst for Merrill Lynch & Co.
``It's not completely clear to me that each supplier has to own the [manufacturing] assets,'' he said. ``It's an issue that's open to debate.''
Clearly, the trend is toward ever-larger trim suppliers and the parallel consolidation of manufacturing. But Buttarazzi said he would not be ``the least bit surprised'' to see interior trim suppliers spinning off some of these newly acquired manufacturing businesses four or five years hence.