Key Plastics LLC is bulking up, buying the auto plastics unit of Dutch manufacturer Kendrion NV in a move that will more than double its presence in Europe.
The purchase will provide Farmington Hills, Mich.-based Key with a wider presence in the region, providing contacts with new customers, said Rui Filinto, president of Key Plastics Europe.
``During the last few years, we have managed a turnaround in Key Europe and have become a reliable supplier with our major customers,'' Filinto said during a Sept. 9 telephone interview from Cologne, Germany, where the businesses were wrapping up details of the sale.
``We were only with the [automakers] and Tier 1 suppliers in France, Italy and Spain. We decided to grow our business, and recognized in Kendrion good expertise and capabilities.''
Kendrion, based in Zeist, Netherlands, had announced a pending sale of its auto plastics division in August, but did not identify the buyer. Key Plastics confirmed the deal two weeks later, sealing the deal for an estimated 30 million euros ($36.5 million) Sept. 9.
Key executives from the United States and Europe are spending a week in meetings with their Kendrion counterparts to discuss the transition. The talks are part of an intense roll-out of expectations that Key owner Ewing Management Group conducts with its acquisitions, similar to those when Ewing first bought the firm out of bankruptcy in 2001.
``They are learning about our business directions, our management principles, about our disciplines,'' Filinto said.
Kendrion has annual sales of about 240 million euros ($292.6 million). That will boost Key's annual sales to $750 million to $800 million from about $500 million.
Like Key, Kendrion's auto plastics unit is primarily an injection molder, with additional work in painting, laser etching and assembly. It turns out a variety of interior trim parts including door handles, center consoles, ashtrays and headrests.
Kendrion officials lamented the unit's reliance on German automakers and its status as a second-tier supplier when it announced plans for the sale. Those fit well into Key's long-term plans, though, said Tim Nelson, president of Key Plastics, who is responsible for the company's North American activities.
Key previously had production facilities in France, Portugal, Italy and the Czech Republic, and recently announced plans for another molding operation based in Slovakia to meet rising demands for auto suppliers in Eastern Europe.
Kendrion has three stand-alone facilities in Germany and another four assembly sites at Volkswagen AG plants in Germany and Belgium. It also gives Key factories in Portugal, Spain and the Czech Republic.
``Clearly Kendrion brings, in our opinion, very good products, very good technology, very good people as well as a customer base Key did not have,'' Nelson said. ``There's not a lot of overlap with what we were doing.''
Increased presence in Europe also should help Key gain contracts from customers looking for suppliers in multiple areas, he said. He has not written off the possibility for other acquisitions by Key, if the right opportunities come up.
``Clearly this lines us up to be more of a global company,'' Nelson said. ``We certainly have our work to do in terms of our integration of Key with Kendrion. We've got a plan to do that. The work begins today. Monday in earnest.''