An internal management team plans to buy FKI plc's automotive group in a deal that includes a large U.S. injection molding operation supplying door handles and lighting products.
The sale, expected to be completed Dec. 15, transfers ownership of Yorkshire, England-based FKI Automotive to the group's former chief executive officer and seven other top FKI managers. A letter of intent was signed Nov. 13.
The new company, which will be known as Trident Automotive plc, will pay $157.5 million in cash to purchase most of the group's net assets.
Those assets include FKI's Lighting and Systems Division in Kentwood, Mich. The high-volume, 1 million-square-foot molding plant is expected to generate sales of about $100 million this year, J. Richard Jones, Trident chief executive officer and co-owner, said from the company's Wixom, Mich., headquarters.
The 104-year-old operation formerly was owned by Keeler Brass Automotive Inc. until a merger in the 1980s with FKI, Jones said. The facility, which supplies Big Three automakers and several Japanese transplants, is informally known as the Keeler Brass plant.
Trident investors also include New York-based Phildrew Ventures and UBS Capital BV, which is owned by the United Bank of Switzerland. Both companies provided financing for the buyout.
Trident will acquire the plant's equipment and other assets, and lease the building from FKI for 71/2 years at $1.5 million per year, according to FKI.
The sale also includes FKI Automotive's cable control systems business at seven other manufacturing sites worldwide. The company makes cables for such products as hand brakes, gears, clutch and steering mechanisms, and fuel-filler doors.
Combined, FKI's automotive group recorded sales of $316 million for the past fiscal year, which ended March 31. The group employs 2,650 people, about 700 of them at the Kentwood facility, Jones said.
The molding plant has about 50 injection presses with clamping forces of as much as 2,000 tons, Jones said. The plant molds nylon exterior door handles and forward and rear lighting systems made from polycarbonate and bulk molding compound. The facility also includes painting and assembly operations.
Trident plans to expand its operations within the next year, Jones said.
``FKI wanted to focus its energies on its other three [business groups],'' Jones said. ``We're focused on automotive and have strong financial partners as part of the purchase. We'll be looking for acquisitions and other ways to grow this business.''
Currently, the Kentwood plant serves Big Three automakers, and Honda Motor Co. Ltd. and Toyota Motor Corp. A recent Honda door handle contract led FKI to invest in automated equipment and new technology at the plant, Jones said.
FKI, a holding company that recorded more than $1.6 billion in sales last year, decided it did not want to pour more capital into its automotive operation, said spokesman Phillip Dennis. The company also makes materials-handling systems, hardware products such as brass knobs, and electric-power items.
``The company knew it had to expand the automotive group to keep it competitive in international markets or sell it,'' Dennis said. ``[Management] decided to reinvest funds elsewhere.''
FKI's return on sales in the margin-thin auto industry was less than that of its other three divisions, said equity analyst Colin Campbell of London-based ABN AMRO Hoare Govett. The automotive group recorded a 6.9 percent return on sales, compared with an average 12 percent return for its other groups, he said.
``It's not clear why, but FKI did not invest a great deal in its automotive group,'' Campbell said. ``What is clear is that the new group is willing to do that.''
FKI Automotive recorded profit of about $21 million last year, with operating net assets of $98 million, Campbell said.