Faurecia has signed an agreement to acquire EMCON Technologies (originally Arvin Industries), an integrator of emissions control technologies for passenger and commercial vehicles. Based in Troy (Michigan, USA), EMCON Technologies posted 2008 sales of 2.4 billion euros and employs 6,000 people in 19 countries. Once the deal is completed, EMCON Technologies will immediately join Faurecia’s Exhaust Systems to form Faurecia Emissions Control Technologies, the new world leader on this market.
A major strategic deal
With this acquisition, Faurecia Emissions Control Technologies:
The post-deal sales of Faurecia Emissions Control Technologies will be 5.2 billion1 euros.
Yann Delabrière, Chairman and CEO of Faurecia, said: “I am pleased to welcome EMCON technologies and its teams within Faurecia. This deal is in line with our company strategy introduced in February 2009. It reinforces our leading position on the market for emissions control technologies, which will boast strong growth over the coming years. Moreover, this deal will take place with no significant increase of Faurecia’s debt.”
For Lee Gardner, CEO of EMCON Technologies, “The entry of EMCON Technologies into Faurecia, a world-scale group recognized by all automakers, is a success for our teams and an important step in our development. It takes place at a crucial moment as the emissions control market requires strong technology developments and enjoys strong growth worldwide.”
Emissions technology - a strong growth, high-tech market
The development of clean vehicles requires the control and drastic reduction of emissions, a reduction in fuel consumption and lighter vehicles. The new technologies developed by the automotive industry as an answer to these objectives will reinforce the technology and product content, systems and processes, leading to a strong market growth.
The total 2020 market is estimated at 65 billion euros versus 29 billion euros in 2008 for passenger vehicles, experiencing 7% growth per year. The total commercial vehicles market, also growing at 7% per year, is expected to reach 16 billion euros in 2020 (vs. 7 billion euros in 2008).
A deal paid in shares, accretive from 2011
The acquisition of 100% of EMCON Technologies’ shares will be paid exclusively by the issue of 20.9 million new Faurecia shares, with no cash impact and no significant impact on the group’s debt. It will generate annual synergies of around 60 millions euros, or 2.5% of 2008 combined sales (excluding monoliths). Faurecia’s objective is for this deal to be accretive on the net income per share from fiscal 2011.
Following the deal, PSA Peugeot Citroën will remain Faurecia’s reference shareholder and hold 57.4% of the capital.
Philippe Varin, Chairman of the Managing Board of PSA Peugeot Citroën, stresses: “We welcome this new and important step of the development of Faurecia which, thanks to its ongoing recovery, has been able to gain the confidence of its customers, its partners and its shareholders. Faurecia
is now ideally placed in the leading pack of worldwide equipment suppliers. PSA Peugeot Citroën, as reference shareholder of Faurecia, will continue to support its development strategy.”
One Equity Partners, an investment fund of JPMorgan Chase & Co., and current shareholder of EMCON Technologies, will hold a 19% stake and be represented with two seats at its Board of Directors as well as one seat on the Board’s Strategic Committee.
Richard Cashin, Managing Partner of One Equity Partners (JPMorgan Chase & Co.), stated: “We are thrilled to be a part of this transaction which allows OEP to become shareholders of Faurecia, a world leading equipment supplier.”
The completion of the deal is subject to obtaining approval of anti-trust authorities, mainly in the United States and Europe, and to the vote of Faurecia shareholders at an Extraordinary General Meeting called on to decide on the contribution at the end of January 2010. PSA Peugeot Citroën has committed to approve the resolutions up to vote at the General Meeting.
Faurecia is one of the world’s leading automotive equipment suppliers, specializing in four major activities: seats, vehicle interiors, front ends and emissions control technologies. In 2008, the Group posted sales of
12 billion euros. It has operations in 29 countries at 190 sites and 28 R&D centers. Faurecia is listed on the NYSE Euronext Paris stock exchange. For more information, visit: www.faurecia.com
EMCON Technologies is a leader in the global exhaust emission control technology industry. The company serves worldwide passenger car, commercial vehicle and engine manufacturers. This $3.2 billion business has operations in 19 countries with 6,000 employees and several long-term joint venture relationships. For more information, visit: www.emcontechnologies.com
One Equity Partners ("OEP") makes private equity investments behind compelling business ideas and strong management teams. Established in 2001, OEP manages $8 billion of investments and commitments for JPMorgan Chase & Co. in direct private equity transactions. Partnering with management, OEP invests in transactions that initiate strategic and operational changes in businesses to create long-term value. OEP's investment professionals are located across North America, Europe and Asia, with offices in New York, Chicago, Menlo Park, Frankfurt and Hong Kong. For more information, visit: www.oneequity.com
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