ContiTech AG plans to expand its hose line operation by acquiring the automotive air conditioning portion of Parker Hannifin Corp.'s Mobile Climate Systems Division.
A maker of highly engineered components for the global light-vehicle automotive industry, the business has five manufacturing facilities, employs about 1,000 and has sales in the $140 million range.
Its plants are located in Monterrey and Montemorelos, Mexico; Chomutov, Czech Republic; Cheonan, South Korea; and Wuxi, China.
The firms did not disclose terms of the transaction, and its completion is subject to regulatory approvals and customary closing conditions.
Once the deal is final, the business will become part of ContiTech's Fluid Technology operation, the firm's largest business unit with a workforce of 14,000 and sales of about $1.6 billion, a ContiTech spokesman said.
Termed by Hanover, Germany-based ContiTech as one of the largest transactions in the company's history, the acquisition “is perfectly in line with our growth strategy,” according to ContiTech CEO Heinz-Gerhard Wente.
Wente said Parker Hannifin “has an excellent presence among the American and Japanese automotive manufacturers and will open additional doors for us in Asia.”
The acquisition will make ContiTech a global supplier to Ford Motor Co., General Motors Co. and Honda Motor Co, according to Wente.
It also will boost — but not free up — capacity, the spokesman said, because presently all of ContiTech's and Parker Hannifin's plants have plenty of work. He said that Parker Hannifin will continue to produce hose for the air conditioning lines.
Equally important, he said, the acquisition will give ContiTech a stronger foundation in the NAFTA region.
Cleveland-based Parker Hannifin is selling the automotive air conditioning business because the operation's long-term prospects will be better served by ContiTech, which has a strong base in the automotive end of the market while Parker Hannifin is more focused on the non-automotive end, a Parker Hannifin official said.
He said the mobile and hose portions of the Mobile Climate Systems Division, which is based in Collierville, Tenn., are not part of the transaction.
“We are pleased to have found a buyer that was the right fit with ContiTech,” said Tom Healy, president of Parker Hannifin's Climate and Industrial Controls Group. “Their complementary product offering, strong automotive focus and balanced regional presence will enable the appropriate investment and growth in this business to ensure its continued success.”
The acquired business manufactures highly engineered components such as hose and tube assemblies, accumulators, receiver dryers and oil coolant assemblies.
The hose lines used for automotive air conditioning systems make up nearly all of the business operations, according to the ContiTech spokesman, “which is why it fits so well with our air conditioning line segment.”
All 1,000 employees of the business will initially join ContiTech. It hasn't been determined yet if adjustments, because of redundancies created by the new plant additions, will have to be made later on a case-by-case basis, the spokesman said.
The purchase of the air conditioning business gives ContiTech more products to work with along with additional goods to complement the company's manufacturing base, he said.
“Our main goal is to get a foot in the NAFTA region,” the spokesman said. “The acquisition is a real win-win situation because our customers and distribution areas do not overlap.”