Automotive supplier Key Plastics Inc. is close to making the largest acquisition in its history, accelerating the company's move into the European market.
Key signed a definitive agreement Jan. 6 to buy the assets of Foggini Group, a maker of molded air louvers and interior trim products based in Turin, Italy.
Terms were not disclosed. The sale is expected to close by mid-February, said Len Griffin, Key Plastics president and chief operating officer. The deal is subject to regulatory approval in the United States and various European countries where Foggini has plants.
Foggini is considered one of Europe's largest suppliers of plastic climate-control vents — used for heating and air conditioning units on instrument panels — and interior trim parts, Griffin said. Those parts include cup holders, speaker grilles, door trim, ashtrays, wood and plastic decorative trim and center console accessories.
The Italian company has nine plants in France, Switzerland and the Czech Republic. It recorded 1998 sales of about $140 million.
Key, based in Novi, Mich., has three European facilities, with sales of about $110 million, Griffin said. The company has operated European plants since 1996.
The sale pushes Key to about a quarter-million dollars in European sales and makes it a large producer worldwide in plastic climate-control and interior trim parts, Griffin said.
The sale also catapults Key into the leading ranks of global suppliers, he added. The company will have toolmaking, testing and validation, and design facilities in the United States and Europe.
``Foggini's products fit extremely well with our components and allow us to be a global supplier of highly engineered, value-added parts,'' Griffin said in a Jan. 7 telephone interview. ``It's a major undertaking for both companies that we've discussed for several months.''
Several other U.S. and European companies also make interior trim products in Europe, including Textron Automotive Co. of Troy, Mich., and Sommer Allibert SA of Nanterre, France. Yet, those larger companies focus more on the entire interior — including making instrument panels and assembling complete systems — than on a specific part. Key will not attempt to integrate entire interior systems or make interior substrates, Griffin said.
Europe plays a key role in the acquisition. Many carmakers are moving to the Continent and expect their suppliers to follow with nearby plants, Griffin said. European auto sales have been extremely healthy for several years.
Yet, some suppliers have had difficulty fusing their growing European operations with their existing corporate cultures. Several publicly held companies, including Donnelly Corp. of Holland, Mich., and Lear Corp. of Southfield, Mich., have taken write-offs to account for underperforming facilities in Europe.
Key hopes to avoid that problem by creating a European base immediately. The supplier will establish a new company in Europe. Foggini Key will be based at Foggini's Turin headquarters and will concentrate on merging the two cultures, said Darrel Hampton, Key senior vice president for strategic planning.
Key wants to keep the Foggini name, Hampton said.
``It's a respected name there and probably better known than Key,'' he said.
Foggini, a privately held, family-owned company, was established early in the century, Griffin said. The company performs injection molding, blow molding, painting, decorating, assembly and foaming. Attempts to reach Foggini officials for comment were unsuccessful.
The company also uses a proprietary dip print system that Key hopes to develop. The system, used for decorative parts, submerges film in a water-based solution before application for better performance.
All told, Foggini operates about 175 injection presses at its facilities, said Joseph Buzzitta, Key vice president of marketing. Foggini has about 1,000 employees, which will double the size of Key's employee base in Europe, Buzzitta said.
Major customers for the Italian supplier include PSA/Peugeot-Citroen SA, Fiat SpA, Renault SA and Volkswagen AG.
Before the sale, Key had plants in Belleme, France; Leiria, Portugal; and Coventry, England. The company also operates a toolmaking and engineering center in Tamworth, England, and plans to move injection molding work from that plant to the Coventry location.
Foggini operates larger plants than Key's European locations. The supplier's plants vary in size from 40,000-250,000 square feet, Griffin said.
With the acquisition, Key plans to record about $550 million in sales during 1999, Griffin said. The company ended 1998 with about $400 million in sales, an increase from about $330.5 million during 1997.
The company placed 19th in Plastics News' ranking of injection molders, with $251.7 million in 1997 North American injection molding sales.
``We've been very aggressive in the acquisition mode and in internal growth,'' Griffin said. ``But we've only gone after companies that are in tune with our products. It has kept us focused.''
