TORONTO, ONTARIO--(CCNMatthews - Oct. 16, 2006) - Martinrea International Inc. (TSX:MRE), a leader in the production of quality metal parts, assemblies and modules and fluid management systems focused primarily on the automotive sector, announced today it has reached an agreement for the purchase of the North American automotive body and chassis operations of ThyssenKrupp Budd Company of Troy, Michigan. The purchase price for the transaction will be approximately US$275 million, comprised of US$95 million in cash and the balance in assumed liabilities. Completion of the transaction is subject to customary closing conditions including regulatory approval and final approval of the board of directors of Martinrea and of the Seller and the transaction is expected to occur by the end of the year. The cash portion of the transaction will be funded from credit funding sources arranged by Martinrea. The parties will work together to make every effort to provide a smooth and efficient transition.
The North American body and chassis operations acquired by Martinrea specialize in a wide variety of metal forming activities, including Class A body stamping, metallic welded assemblies, hot metal stampings, automotive sheet metal stamping and the module assembly of a wide variety of chassis component parts. The acquired operations cover 13 plants throughout North America, with over 3500 employees, as well as a technical centre in Michigan. Martinrea indicated that the acquired assets are expected to generate sales in 2007 of approximately CDN$1billion, with an anticipated normalized EBITDA of approximately CDN$60million. The Company further indicated that the four largest customers of the acquired business are Daimler Chrysler, Ford, General Motors and Nissan, each with over 10% of the revenues generated.
The acquired assets will include a large Class A body stamping facility in Shelbyville, Kentucky, which produces sheet metal automotive body stampings and assemblies, such as doors and fenders, in a facility approximating one million square feet. This would be Martinrea's first Class A facility. A 200,000 square foot facility in Hopkinsville, Kentucky produces chassis frame modules, components and suspension assemblies. A facility in Hermosillo, Mexico, located near Martinrea's existing fuel tank plant, assembles chassis products such as engine cradles. Included in the asset package are six plants operated by Thyssenkrupp Fabco, which produces medium and heavy metal stampings, weldments and major tubular fabrications, in the southern state locations of Springfield, Tennessee and Tupelo, Mississippi, thus giving Martinrea a metal manufacturing base in the southern United States as well as in the MidWest and northern states; as well as Fabco plants in Michigan and three locations in southern Ontario. A facility in Kitchener, Ontario, builds full sized chassis frames and frame components, bumpers and bumper reinforcements. The purchased assets also include the systems assembly facilities of Thyssenkrupp Budd Systems, that will allow Martinrea to become an integrator of customer modules including rear suspension modules for cars and sport utility vehicles in locations in the United States, Canada and Mexico.
Fred Jaekel, Martinrea's Chief Executive Officer, stated: "As we continue to build our company, I am happy to announce the pending acquisition of very complementary and of world quality ingredients to the further formation and enhancing capabilities to Martinrea, giving us new additional technological strengths and locations that otherwise we would have to build to be able to support the needs of the automotive industry as a world quality supplier of body chassis, structures and fluid management systems. I have always viewed TK's North American Body and Chassis operation as a phenomenally well equipped competitor with state of the art technologies, always maintaining the latest manufacturing capability."
"Viewed from the customers' perspective which demands a long term supply base, we will now possess the bench strength combined with our people unparalleled to none," Mr. Jaekel added. "In addition to widening our customer base, we inherit people that can unleash their creativity and have a sense of ownership and accomplishment that has been the secret of our success. I would like to personally embrace all the people from ThyssenKrupp's North American body and chassis operations to our Martinrea family and look toward to the development of a strong bond between us."
"In our outlook on our last quarterly conference call, we indicated that we were seeing many opportunities, and we intend to take advantage of those that make sense to us," said Rob Wildeboer, Martinrea's Chairman. "We believe this transaction reflects our prudent approach to growth, as we add assets and capabilities that will strengthen our Company and increase our long term value. We believe this acquisition will be accretive, is not dilutive as no equity issue is contemplated, and permits us to maintain a strong balance sheet as increased debt is covered by a significantly increased asset base. This acquisition will make us a significantly larger player in the North American metal forming market, with sales putting us in the group of the four of five largest suppliers in this space, along with Magna (Cosma), Tower Automotive and Dana Corporation. We believe these assets not only represent growth in the short term, but will give us the base to grow with all our customers, existing and new, as they look for creative solutions from aggressive and financially strong suppliers. I am greatly looking forward to seeing what our people, existing and new, can do with these assets. And, in our view, the price was right. In looking at our growth we analyze typically whether it is better to build or to buy--in this case it would in our view cost more to build this asset base, with no work guaranteed, than to buy it and integrate it, and we avoid more creation of capacity in North America."
Nick Orlando, Martinrea President and Chief Financial Officer, stated, "I believe that this acquisition greatly expands our customer base in the metal forming area of our business. Nissan will be a very significant customer for us with great growth potential, and our General Motors, Daimler Chrysler and Ford metallic business will significantly expand post acquisition. I am thrilled at the manufacturing footprint we are establishing in new regions, especially the southern United States, where there are so many metal forming opportunities to service the OEMs who have established assembly plants and experienced people there. In order to best serve our customers, we want to be wherever the customer is located, and now we have great metal forming presence in each of Canada, where we were already well established; Mexico, where we are now more established and will be more so with the completion later this year of our metal stamping facility in the Saltillo area; and now throughout the United States, in addition to our Icon facility in Indiana which has done well since we established ourselves there early last year. After closing we will be a full ranged metal forming supplier, with Class A ability, hot stamping technology and operations that are currently in great demand by our customers, as well as additional metal stamping, a wider base of welded assemblies, hydroforming in the United States, the engineering capability to manufacture entire truck frames, and module assembly facilities that complement our broad existing capabilities. Our people are prepared for a smooth and effective integration. We anticipate that the combination of existing and new assets will permit revenue and profit growth to accelerate as the acquired assets are integrated."
The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".
This press release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. When used herein, words such as "intend" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions by and information available to the Company. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include such risks and factors as are detailed from time to time in the Company's periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Actual results may differ materially from those currently anticipated. The Company has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Martinrea International Inc.
President and Chief Financial Officer
(905) 264-2937 (FAX)
30 Aviva Park Drive
Vaughan, Ontario, L4L 9C7