A Swiss financial group has purchased the European arm of automotive supplier Findlay Industries Inc. with plans to roll it into another plastics group as part of a move to establish a strong European auto supply competitor.
Capvis Equity Partners AG of Zurich still must obtain approval from European officials to merge Findlay Europe into its Polytec Holding AG group. The combined operations would create a company with more than 500 million euros ($611 million) in annual sales this year and 3,500 employees.
The long-term plan is to seek other acquisitions for Polytec and build it to a level it can handle an initial public offering and establish itself as a strong independent firm, said Yves Dudli, a Capvis partner.
``What [automakers] like in Europe are good, midsize companies rather than the large, whole-interior suppliers,'' Dudli said June 3 by telephone. ``They want systems and plastics suppliers who can do smaller modules.''
The marriage of Findlay Europe with the existing Polytec makes sense, he said. Findlay produces natural fiber composites used in door panels, seat backs, trunk systems and other components, selling mostly to higher end luxury vehicles carrying the BMW, Audi, Rolls-Royce and Land Rover brand names.
Polytec molds a variety of interior, exterior and functional components with a customer base more focused on midlevel vehicles such as nameplates from Volkswagen AG and General Motors Corp.'s Opel unit.
Together the companies can offer trim and substrate to multiple customers.
``Findlay Europe's natural fiber door insert capabilities, combined with Polytec's plastics technology, should allow Capvis to combine the strengths of these two holdings,'' said David Eberly, managing director of Beringea LLC, a Farmington Hills, Mich.-based company that was a financial advisor to Findlay in the sale. ``[Capvis] saw itself not as a financial buyer but as an industry buyer.''
The companies did not disclose a price for the deal.
The sale of Findlay Europe allows Findlay, Ohio-based Findlay Industries to focus on its North American operations, paying off debt and positioning the firm as a profitable, but much smaller company.
Like many suppliers, Findlay got into trouble in the 1990s with ambitious growth plans that left it burdened with debt.
Sources close to the deal said Findlay is on course to earn $15 million this year on estimated sales of between $200 million and $240 million.
It is not unusual for troubled companies to withdraw from unprofitable lines of business, cut workers or sell to rivals to avoid bankruptcy. But Findlay recovered enough cash from the sale to put it on a competitive footing, sources said.
The company Philip Gardner founded in 1959 needed a sale to satisfy its banks and its largest customers, the sources said. Last year Gardner's efforts to arrange for a new bank line and sell his European operations faltered.
But Gardner was unable to export enough of his European profits to staunch his North American losses of $5 million to $6 million annually, according to a source.
The Findlay Europe holdings now under Capvis includes four plants in Germany, one in Poland, one in Spain and an assembly and sequencing plant in England.
Capvis' Polytec, based in HÃ¶rsching, Austria, includes 15 factories, the bulk of them in Europe with operations in Germany, Austria, Sweden, Spain and Italy. It also operates two plants in North America - Polytec Foha Inc. in Warren, Mich., and Polytec Foha Corp. of Markham, Ontario - mostly focused on spoilers and other exterior parts.
Polytec's European operations take in a wide range of plastics processing, including thermoset composite production using sheet molded compound and reaction injection molding as well as injection molding and blow molding of thermoplastics.
Once Capvis gets its expected approval to merge Findlay Europe and Polytec and integrates them, the financial backers will seek a few more complementary acquisitions, Dudli said.
``We do want to reinforce our geographic and client base,'' he said. ``We see a lot of acquisition opportunities in Europe. There are many companies in the 50 [million] to 100 million euro [$61 million to $122 million] range in sales who feel they are too small to be taken serious.''
Dudli expects future target companies will be smaller than Findlay Europe. The company may eventually invest in North America, but any potential acquisition must be strong enough to not require constant monitoring.
Sherefkin is an Automotive News staff reporter.