The automotive seat industry now boasts a Big Three of independent suppliers: Lear Corp., Johnson Controls Inc. and Magna International Inc. Magna announced an agreement Aug. 29 to pay about $135 million in cash for Douglas & Lomason Co., a Farmington Hills, Mich.-based supplier of seating systems, frames, covers, foam and mechanisms.
Donald Walker, Magna's president and chief executive officer, said in a news release that the purchased business combined with Magna's Atoma Interior Systems Group will allow the Markham, Ontario, firm to compete cost-effectively worldwide.
The deal will add a major seat customer to Magna's business. Douglas & Lomason's contracts include making seats for the Ford Contour and Mercury Mystique. Magna also reportedly is in the running to produce the interior for a small sport utility vehicle Ford plans to make in the United States based on the Mondeo.
James Hoey, Douglas & Lomason's senior vice president and chief financial officer, said his firm has about 20 plants in the United States, Canada, Mexico, Europe and China and employs about 5,900. Auto interiors accounted for about $500 million of its 1995 sales. Another $61 million in sales was logged by its Denver-based Bestop Inc. subsidiary, which makes soft tops and accessories for convertibles, and the Chantland Co. division, a producer of conveyor components in Humboldt, Iowa.
Magna plans to keep the profitable Bestop unit and may eventually sell Chantland. Hoey said the purchase will help his firm capitalize on seating technologies it has been developing but he would not elaborate.
Douglas & Lomason faced stiff competition from Lear and JCI, both of which have been expanding aggressively. It had taken steps to expand in Europe and Asia, but had no significant market share outside North America.
Magna's $31-a-share offer is about a 65 percent premium over Douglas & Lomason's typical share price before rumors of the purchase surfaced. Hoey expects the deal will be done by mid-October. In the first six months of 1996, Douglas & Lomason had profit of $7.4 million on sales of $299 million.
Magna's sales for the nine months ended April 30 were C$4.2 billion (US$3.1 billion) and net profit was C$222.9 million (US$162.7 million).
Plastics News correspondent Michael Lauzon in Toronto contributed to this story.