Certain opportunities are just too perfect to pass up.
Continental AG's Vibration Control business, which produces anti-vibration parts like engine mounts for the automotive industry, has a strong global presence, with 10 manufacturing plants mostly concentrated in Europe. But it needed to enhance its presence in North America.
Cooper Standard Automotive Inc.'s Anti-Vibration Systems business makes similar parts, but its strength is in the U.S. and Canada, with one site in France and two in India through a joint venture.
So when the chance for Conti to acquire the Cooper Standard unit came along, it capitalized. Cooper Standard agreed to sell its unit to Continental for $265.5 million, subject to closing conditions and antitrust approval in the relevant countries.
Continental projects the deal to close sometime in the first half of 2019.
"We are now a real global player in all relevant markets for the automotive business," said Kai Fruehauf, head of Continental's Vibration Control business unit. "We can really serve customers today out of one hand. We can go to our customers and say wherever you want to develop and produce, we are there to support you."
If approved, Vibration Controls will operate 15 facilities: five in Germany; two in France; one in Slovakia; one in Mexico; one in Brazil; one in China; one in Auburn, Ind.; and one in Mitchell, Ontario. It will hold a 50 percent stake in Sujan Cooper, a joint venture in India that operates sites in Pune and Chennai.
The combined business will generate sales of about $737.8 million. Cooper Standard reported about $326.7 million for its AVS unit in 2017. The business employs about 1,000 people globally, and Fruehauf said all will transfer with the business.
"Cooper AVS is a profitable unit and we plan to continue to operate all plants," Fruehauf said. "We're not talking about a restructuring case. We have two business units with a very similar culture. Both are committed to technology and high quality. When you look at the technical competencies, they are also very, very good. We have here a lot of things that fit very well together."
Jeff Edwards, Cooper Standard chairman and CEO, said on a conference call discussing the company's third quarter financials that the firm's strategic vision is to be No. 1 or No. 2 in all product lines. And given the scale of its AVS business in relation to its competitors in the market, Cooper determined that it cannot realistically expect it to grow into a top global player.
With annual revenue of $327 million in 2017, Cooper's AVS business held about a 3 percent share of the $10 billion global market, according to Cooper.
"We believe that this decision will enable this business to grow to its full potential," Edwards said.
"Our AVS unit is a great business with a lot of outstanding people who serve our customers at the highest level. I want to personally thank them for their many significant contributions and wish them well as they transition to the new ownership."