by Amy Antenora
Managing Editor, aftermarketNews.com
TOLEDO, OH — It’s official. Dana Corp. has finally named a buyer for its Automotive Aftermarket Group (AAG). As first-reported early this morning in a ”Breaking News” bulletin from aftermarketNews.com, New York-based buyout firm Cypress Group has agreed to purchase the Dana AAG unit for approximately $1.1 billion in cash. The transaction, which is expected to close in the third quarter of 2004, is subject to the purchaser’s receipt of financing from committed sources and other customary conditions, including the receipt of regulatory approvals.
Dana AAG President Terry McCormack and John Washbish, the AAG unit’s president of customer relationship management, along with their executive team will continue with the company. According to Michael Finley, managing director of Cypress, former Echlin top execs Larry McCurdy and Joe Onorato have signed on to serve as directors of the new company.
“We look forward to working with the management of Dana’s Automotive Aftermarket Group as they continue to focus on the higher growth segments of their market,” said Finley.” We are pleased that Terry McCormack, John Washbish, and their team have agreed to continue with the company. Together, we look forward to growing and nurturing the company’s long-standing relationships with its extensive customer base by delivering the premium products and services they require.”
While there has been much speculation lately as to which company would buy the unit, Dana has been making many headlines in the past year or so.
In April of this year, Dana Corp. named former GM exec Michael Burns president and CEO, following the loss last September of its chairman and CEO Joe Magliochetti. In November 2003 the company fought off a hostile takeover bid from ArvinMeritor and then in December 2003 announced plans to divest the AAG unit. On top of it all, Dana Corp. is celebrating its centennial this year.
The company decided to sell Dana AAG to focus more on its OE customers. Dana AAG produces and markets a broad line of replacement products, including Raybestos brake products, Wix filters, Spicer chassis products and Beck Arnley parts primarily for import applications.
McCormack echoed Finley’s enthusiasm and said he is ready to start a new chapter focusing on soley on the aftermarket segment. “We are excited to begin the next chapter of our company’s history as an independent entity, focused exclusively on the aftermarket customer,” McCormack said. “Cypress brings significant experience in our industry to the table and strongly supports our strategic direction. Their prior success investing in the automotive industry, most notably in Lear Corporation, gives us tremendous confidence in their role as our new partner.”
Washbish also spoke highly of Cypress. “Most impressive is the importance they place on serving customers,” he said. “They came into the buying process with some excellent advisors, and they listened diligently. We are convinced that these folks understand the automotive aftermarket and are committed to improving and growing our business. They have a proven track record of acquiring sound, operating businesses and investing with management to foster continued growth.”
The sale includes 52 facilities employing approximately 13,000 people worldwide. Combined annual sales for these operations totaled approximately $2 billion in 2003. The transaction also involves several premier replacement product brands and a variety of under-vehicle components.
The sale does not involve Dana’s Clevite distribution and marketing activities based in Ann Arbor, Mich., or its related operations in Churubusco, Ind.; Collierville, Tenn.; and Olive Branch, Miss.
The company said proceeds from the sale will be used for reinvestment in its core businesses, as well as for the further reduction of Dana’s debt, and a contribution to the company’s pension plans.
“The completed transaction will provide Dana with important strategic and financial flexibility, which will be used to further invigorate our core businesses and better serve our global original equipment customers,” said Dana Chairman and CEO Michael Burns. “Dana will be a more streamlined company that is better focused on delivering world-class component and systems solutions to our customers in the automotive, commercial vehicle, and off-highway markets.”
Credit Suisse First Boston LLC and Goldman, Sachs & Co. are acting as financial advisors to Dana for this transaction.
To learn more about Dana, go to: www.dana.com.
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