Magna International Inc. has purchased automotive supplier Tricom Group Holdings Ltd. of Nottingham, England, to gain its first footing in the seating business on European soil.
The large Markham, Ontario, supplier signed an agreement May 12 to purchase all the shares of the privately held British company for $72 million, subject to potential price adjustments. The transaction, which includes three Tricom plants in England, is scheduled to close May 23.
The purchase includes two plants in Nottingham and one in Bolton, England. Combined, the facilities have about 500,000 square feet of space and employ 800. The plants design, engineer and manufacture complete seats, seat frames and other seating components for several carmakers.
Tricom's wholly owned manufacturing facilities expect combined annualized sales of $140 million in 1997, according to Magna officials. Tricom officials were unavailable for comment.
Upon inking the deal, Magna officials said the Tricom sale is only the first in a series of potentially larger forays into the European seating market. The company plans to compete in the market on equal ground with other large suppliers, said Graham Orr, Magna executive vice president for corporate development.
``[The Tricom sale] is quite strategic for us,'' Orr said. ``We expect to grow dramatically in Europe. While Tricom is not our springboard into the continent, we can use their technology to develop our seating business there.''
Orr said Magna is considering other acquisitions, or may open greenfield plants in Europe. Among those companies under consideration by Magna is Keiper Recaro GmbH & Co., a large German manufacturer that recently announced plans to put its seating operation up for sale.
Magna and several other suppliers have been asked to take a look at the company's seating business, Orr said.
Other large North American seating suppliers, such as Lear Corp. of Southfield, Mich., and Johnson Controls Inc. of Plymouth, Mich., have opened plants in Europe. The moves come as Detroit's Big Three carmakers continue to expand their operations across the continent. Magna currently is the third-largest seating supplier in North America, with sales of about $1 billion, Orr said.
Magna already has about 40 European plants that supply interior, exterior, body and chassis, and powertrain systems to carmakers. The company recorded European sales of about $1.5 billion during 1996, up dramatically from $200 million in European sales four years ago. European sales account for about a fifth of Magna's consolidated global revenues, a percentage that's expected to grow, Orr said.
However, the Tricom acquisition is Magna's first seating operation on those shores. The seat assembly plants primarily serve carmakers in the United Kingdom. The firm makes seat frames and complete seats for Ford's high-end Transit commercial van and ships seating assemblies to Ford operations in Belgium. Ford Motor Co. is Tricom's largest customer.
In addition, the plant makes seating assemblies for the Frontera sports utility vehicle, a joint venture between General Motors Corp. and Isuzu Motors Ltd. Tricom also produces seat frames for Rover Group plc's Range Rover and Discovery, as well as jump seats for the Discovery.
The plants, which operate at about 60 percent capacity, have room for expansion, Orr said.
The plants perform metal stamping, assembly and cut and sew operations. Molded vinyl seat backs, urethane foam seats, fabric and vinyl coverings and other components are shipped to the plant from outside suppliers.
The acquisition continues Magna's recent expansion into the seating market. In October, it bought Douglas & Lomason Co. of Farmington Hills, Mich., a large North American seating systems and parts supplier, for $135 million in cash. The firm now is called Magna Lomason Corp.
Magna announced last week that it had completed the purchase of Georg Naher GmbH, a Kaiserslautern, Germany, automotive interiors company with four plants in Germany, Belgium and Spain, for $44 million. Georg Naher makes trunk linings, interior panels and multifunctional carpet and sound insulation systems for German carmakers and other original equipment manufacturers.
In December, Magna also acquired Caradon Rolinx plc of London for $32.9 million. The company, which has two plants in England, makes molded and painted plastic bumper fascias. The company also bought Pebra Gmbh Paul Braun, a German supplier of plastic bumpers, body side moldings and panels, and other exterior components, for $22.6 million in May.
Magna, which has more than 34,000 employees, recorded about $5.85 billion in worldwide automotive sales during 1996. The Tricom plants are expected to be grouped with the company's Atoma Interior Systems subsidiary, based in Markham.