Continental AG to buy US rival Veyance Technologies for $1.9 bn
11 February 2014
German tyre and car parts maker Continental AG yesterday struck a deal to buy Veyance Technologies, which once belonged to rival tyre giant Goodyear, from private equity firm Carlyle Group, for €1.4 billion ($1.9 billion) in order to expand its global industrial business, particularly in the US and South America.
The acquisition will enable Continental to raise the share of its non-automotive sales from 28 per cent of group revenue to 32 per cent.
Continental plans to fund the acquisition through cash and available credit lines.
Carlyle had acquired Veyance in 2007 from Goodyear Tire and Rubber Company for $1.475 billion and has license to use the Goodyear Engineered Products brand for its range of belts, hoses and other products.
Veyance manufactures and markets engineered rubber products for industrial, automotive, and military markets.
The Ohio-based company provides industrial hoses, hydraulics, power transmission products, automotive aftermarket parts, commercial truck aftermarket parts, air springs, conveyor belts, rubber tracks and rubberized components, OE hoses, belts, air springs and molded parts, home and garden products, power sports products, and marine fenders.
Veyance operates globally in the field of rubber and plastics technology and in 2013 recorded sales of approximately €1.5 billion, of which, around 90 per cent of it were generated outside the automotive industry.
''Veyance's business and geographic presence complements Continental's existing global footprint, and the planned integration of Veyance into our ContiTech division will expand our position in rubber and plastics technologies on a worldwide basis,'' said Dr. Elmar Degenhart, chairman of Continental's executive board in Hanover.
Veyance has 27 plants around the world, including in the US and South America, with a workforce of about 9,000, which will be integrated into the German company's ContiTech division, Continental said.
ContiTech currently accounts for more than 10 per cent of Continental's 2013 sales of €33.3 billion. The merged company will have sales of approximately €5.4 billion, and employ about 39,000 people worldwide.
Heinz-Gerhard Wente, member of the executive board of Continental AG and CEO of the ContiTech division, said, ''Veyance Technologies will complement our ContiTech division in key markets where our presence is limited, particularly in the US and South America. Plants in Mexico, Canada, China, Australia and also South Africa will provide additional opportunities,'' said Wente.
Wente said the acquisition could create synergies worth about €75 million in the next four years.