Sweden's Plastal Holding AB has signed a deal to buy German injection molder Dynamit Nobel Kunststoff GmbH, creating a European auto plastics supplier with more than 1.4 billion euros ($1.6 billion) in annual sales.
The sale agreement, announced Nov. 8 for undisclosed terms, is part of a reshuffling of the European automotive supply industry, which is seeing the emergence of major continental players from a region that previously relied on a network of smaller competitors.
``This trend has been affecting every system, every material,'' said Antonio Ferreira, London-based manager of European component forecasts for auto consulting group CSM Worldwide. ``It's happened in interiors, in seats and electronics. It's now affecting the plastics as well.''
Plastal can move into the upper ranks with the purchase of DNK of Weissenburg, Germany. Plastal, based in KungÃ¤lv, Sweden, has 12 plants in seven countries - Sweden, Norway, Belgium, Spain, Italy, Germany and Poland. Its 2,300 employees turned out 510 million euros' ($600 million) worth of parts last year, including bumper fascias, sill covers, spoilers, grilles, instrument panels, center consoles and interior and exterior trim.
DNK, part of GEA Group AG in Bochum, Germany, is far larger than Plastal, with 915 million euros ($1.07 billion) in sales and 26 facilities spread throughout eight countries. Thirteen of those plants are in Germany, with the others in France, Spain, Italy, England, the Slovak Republic, Turkey and Argentina.
GEA Group has had its plastics company up for sale for more than a year. In 2004, GEA had an agreement to sell DNK to Urbana, Ill.-based Flex-N-Gate Corp., but that sale never finalized.
At about the same time GEA and Flex-N-Gate called off negotiations, Plastal came under new ownership, with investment group Nordic Capital Fund V buying a majority share in the company in early 2005. The new owners wanted to expand the firm.
Buying DNK will allow Plastal to become a leading supplier, with products spread over the entire European auto industry, Chief Executive Officer Christer Palm said in a news release. No single automaker will account for more than 15 percent of the company's sales.
``I see a great potential in us becoming better equipped to meet our customers' demands, both when it comes to products and capacity,'' he said. ``The combined company will also have a solid financial base.''
The agreement also calls for Plastal to acquire auto supplier Johnson Control Inc.'s 27 percent share in Menzolit-Fibron GmbH, a DNK subsidiary and a producer of sheet molding compounds and long-fiber-reinforced thermoplastics.
The acquisition is one of a series of shifts among European suppliers in the past few years.
Some of the shakeout has come as a result of past failures. Peguform GmbH, for instance, was sold in auction to Cerberus Capital Management LP in 2004 because of problems with parent company Venture Holdings LLC. The European holdings of Collins & Aikman Corp. are currently up for grabs because of the bankruptcy filings of its North American parent.
But Ferreira noted that a number of other companies have been expanding at a steady pace, to adapt to a newer European auto industry.
Injection molder Mecaplast International of Monaco, for instance, has grown from 233 million euros in sales in 1999 to 800 million euros ($942 million) in 2004 through focused acquisitions, while also boosting its number of employees from about 2,600 to 7,500.
Plastic Omnium SA has opted to grow through an alliance, going from a stand-alone focus in structural plastics and bumper fascias to a wider international stance by joining Hella KGaA Hueck & Co. and Behr GmbH & Co. KG to create HBPO, a front-end module specialist combining the specialties of all three companies. Each partner company retains its independence for other sales while contributing to the joint venture.
Moving to a larger, international supply base only makes sense, Ferreira said. Automakers like Renault SA, PSA Peugeot Citroen SA and Fiat Auto SpA have gone from national players to international groups through mergers and alliances.
``If you look at the Fiat, Peugeot and Renault supply chain of 10 years ago compared to today, you'll see that a lot of small companies have disappeared and been taken over.
``The trend is maybe not to go to the extent of the major suppliers of North America like Delphi or Visteon, but they want major, international suppliers,'' Ferreira said.
As a result, Europe's automotive supplier landscape will begin to resemble the one in North America - with large players able to offer geographic and product reach and smaller companies that operate in specialized niches.