David Stockman's Heartland Industrial Partners has reached an agreement to acquire Textron Inc.'s automotive trim business, according to a source familiar with the discussions.
The $1.3 billion deal will transfer ownership of North America's largest injection molder.
The proposal would link Textron Automotive Co.'s trim division to Collins & Aikman Corp., which is controlled by Heartland, and create a giant parts maker with more than $4 billion in sales.
Stockman plans to use Textron's instrument panel and trim business to give Collins & Aikman the size, customer base and global reach to become a major supplier to Tier 1 automotive giants such as Lear Corp. and Johnson Controls Inc.
Stockman's acquisition of Tier 2 suppliers for Troy, Mich.-based Collins & Aikman is not complete, according to the source. The former Reagan administration budget czar still must add several niche companies to his interiors platform group.
The Textron deal could be announced as early as Aug. 8, when Collins & Aikman Chief Executive Officer Tom Evans announces second-quarter earnings in a conference call with analysts.
Stockman, a founding partner of Heartland, the Greenwich, Conn.-based private equity company, could not be reached for comment.
At $4.3 billion in sales, the combined entity would have ranked No. 20 on the Automotive News list of the top 100 automotive global suppliers. In injection molding alone, the joint operations would boast more than $2 billion in sales.
Collins & Aikman already purchased another injection molder this year, Becker Group LLC, as part of its effort to control material production within cars and light trucks.
It is not clear yet what would happen to Troy-based Textron Automotive's Kautex division, a blow molder of plastic fuel tanks.
Textron's trim division vastly outranks Collins & Aikman, with Textron listing $1.5 billion in injection molding sales in 2000 in North America alone, to place it as the largest injection molder in Plastics News' annual ranking. It has 16 plants in North America and 353 presses, with 9,000 employees.
By comparison, the combined injection molding capacity of Collins & Aikman and its newly acquired Becker group had little more than $600 million in sales last year. With Becker, C&A lists its plastics holdings as taking in 17 plants and 5,800 employees.
Beyond mere size, though, the Textron acquisition would give Collins & Aikman a global reach. The trim unit moved extensively into Europe in 1999 when it formed a joint venture to buy plastics processing operations in Italy. It bought those facilities outright last year. Textron ranks as one of the top three cockpit suppliers in Europe, with manufacturing in England, Belgium, the Czech Republic and the Netherlands in addition to Italy. It supplies a cockpit module for Ford Motor Co.'s Mondeo car and has extensive contracts for Fiat.
In 2000, it added to its global portfolio with the purchase of a majority stake in Brazil's Plascar Ind£stria e Comerico Ltda., with facilities in Brazil and Argentina.
Earlier this year, the company began formulating an alliance with South Korean supplier Hyundai Mobis, which would give it further entry into the Asian car market.
Textron's trim unit also has technical expertise to go along with its production footprint. It can produce interior trim using a variety of materials and processes, including all of the leading contenders to replace PVC.
Last year, it purchased M&C Advanced Processes Inc. of Ann Arbor, Mich., to gain access to its proprietary closed-loop injection molding technology, one promising to improve part production and reduce scrap. The system, now called IntelliMold, not only has upgraded processing within Textron, but the company has begun licensing the system for use outside the auto industry.
The deal would allow Collins & Aikman to better compete with newly strengthened French seat maker Faurecia, which earlier this year acquired Sommer Alibert SA, Europe's largest instrument panel maker.
A spokesman for parent company Textron Inc. of Providence, R.I., declined comment. The industrial conglomerate has been following a strategy to reduce its dependence on the auto industry. In late July, Textron sold the manufacturing assets of its electric motor components business to Johnson Electric of Hong Kong in a deal valued at $12.5 million.
Textron Inc. Chief Executive Officer Lewis Campbell hinted at more divestitures during his July 18 conference call to analysts. ``We're simplifying our portfolio with strong businesses in attractive industries.''
Textron Automotive ended forth quarter 2000 with high inventories, only to be hit by the Big Three's first-quarter production slowdown and DaimlerChrysler Corp.'s demands for 5 percent price cuts. That hurt profits.
In February, Textron began marketing its automotive trim group to potential buyers, according to the source who saw the offering memorandum.
At the same time, Heartland was taking a 60 percent stake in Collins & Aikman, prompting its Chairman and CEO Tom Evans to seek out additional plastics operations that would provide the firm with more expertise in interiors.
In March, the company announced plans to buy Becker Group of Sterling Heights, Mich., an injection molding operation with $250 million in sales, seven plants and nearly 1,000 employees.
Since finalizing that purchase, the firm has restructured to provide a plastic emphasis under the oversight of Louis Gasperut, chief operating officer for North American Plastics. It recently named Ken Telfer its director of lean manufacturing for plastics and opened its new North American plastics headquarters on July 30 in Troy - about five miles from C&A's global headquarters, but less than a half-mile from Textron Automotive's corporate offices.
Detroit-based Plastics News staff reporter Rhoda Miel contributed to this story.