Opening the door to more Latin American business, Magna International Inc. has entered a joint venture to buy a Mexican molder of exterior automotive parts.
The buyout of Moldes Para Pl stico Ayareb SA de CV adds another notch to Magna's growing list of acquisitions. While not big by U.S. standards, Ayareb, based outside Mexico City in Cuatitlan-Itzcalli, was one of Mexico's larger homegrown plastics injection molders.
The acquisition was made by Magna's Decoma Exterior Systems group, a maker of such products as plastic bumper fascias, body panels and exterior decorative systems. Decoma owns 70 percent of the joint venture company, called Decomex Inc. The remaining 30 percent of Decomex is held by former Ayareb owner Jesus Ayala Gomez.
The purchase price was not disclosed.
Decoma, based in Markham, Ontario, will manage the 375,000-square-foot Ayareb plant, which makes and finishes fascias, grilles and other exterior parts. The division has set up an operating subsidiary called Decoplas SA de CV to run the facility.
The Ayareb plant expects to record about $80 million in sales this year, according to a Magna news release. The 17-year-old custom molder owns five 3,000-ton injection presses, including three that were installed since early 1995. The facility also has several smaller presses with clamping forces of 300-2,000 tons.
A majority of the plant's business comes from making bumper fascias for some of the world's largest carmakers, all of which have plants in Mexico. Those customers include Chrysler, Volkswagen, General Motors, Nissan and Ford.
The purchase helps expand Magna's presence in Latin America, an area of the world that the company is just beginning to penetrate, said equity analyst Gregory Misztela of Griffiths McBurney & Partners in Toronto.
Magna only has one other Mexican plant, and the company has no facilities in either Central or South America, according to Misztela.
``It's another break in the wall for their development,'' he said. ``They'd like to expand their current base in Mexico and South America, and this gives them the opening they might need. It's a prudent acquisition, like many of the ones they've done.''
Misztela speculated that the publicly held company's new Decomex division might be the launching pad for other acquisitions in Latin America.
Magna has been on a buying binge in other parts of the world. Among its recent acquisitions have been seating supplier Tricam Group Holdings Ltd. of Nottingham, England; interiors supplier Georg Naher GmbH of Kaiserslautern, Germany; and bumper supplier Caradon Rolinx plc of London.
Officials at Magna, also based in Markham, were unavailable for comment. Ayareb plant officials referred all questions to Magna.
Magna currently employs more than 35,000 at 124 manufacturing sites.
The company's Decoma division ranked third among North American injection molders in 1996 with an estimated $573.2 million in sales, according to Plastics News data.
The division racked up more than $4.3 billion in worldwide sales last year.