CONCORD, ONTARIO — Decoma International Inc. agreed to sell its fledgling Brazilian operation to its largest shareholder, Magna International Inc.
The Decoma operation is to supply exterior plastic parts and components such as fascias, fenders and lift gates solely for the Mercedes Benz A Class ``city car'' made in Juiz de Fora, Brazil. The Concord-based firm expects to complete the deal by the end of July for about $C24 million (US$16.3 million), an amount representing its investment, said S. Randall Smallbone, Decoma vice president of finance and chief financial officer.
Decoma now is doing pre-production runs at its new plant in Juiz de Fora. The firm projects employment of about 150 when the plant is in commercial operation, Smallbone said June 11 by telephone.
He said Decoma decided to sell the operation to Markham, Ontario-based Magna partly because the latter would have more negotiating power on parts prices. Decoma also is interested in setting up an operation in the Sao Paulo, Brazil, area, where most auto assemblers are located. Juiz de Fora is about a six-hour drive from Sao Paulo. Smallbone said Decoma's investment in Juiz de Fora is small.
Decoma reported sales of C$679.6 million (US$462.1 million) and net profit of C$36.8 million (US$25 million) for the nine months ended April 30.