Update: ContiTech expanding AVS business with €230m acquisition

Germany: Continental AG is significantly expanding its anti-vibration systems (AVS) business through the acquisition of Cooper Standard’s AVS operations.

The company announced the agreement with the Novi, Michigan automotive supplier on 2 Nov, and later confirmed to ERJ that it expects the estimated $265.5 million (€230-million) acquisition to be completed by the middle of next year.

“We are expecting to have received the approvals from all the respective antitrust authorities in the first half of 2019,” explained Antje Lewe, head of media & public relations, Continental Corp., ContiTech division.

A timespan of this length, she went on to say, is not unusual given the scale of the acquisition and the number of relevant antitrust authorities involved.

The deal will include Cooper Standard’s North American anti-vibration systems business – which includes two manufacturing facilities in Mitchell, Ontario, Canada and Auburn, Indiana.

The Auburn facility also has additional mixing capacities with a large scale material development laboratory.

The transaction also includes a French plant in Rennes – subject to consultation with the site’s works council – and a 50% stake in Indian joint venture Sujan Cooper with two plants in Pune an Chennai.

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.; one in Mitchell, Ontario; and will hold a 50% 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's AVS business held about a 3% share of the $10 billion global market, according to Cooper. Conti's unit reported 2017 sales of about $411.1 million.

ContiTech’s vibration control business, according to Lewe, generated sales of €347 million in 2017.

“So business with anti-vibration technology will be further extended,” she noted.

Cooper Standard products include conventional and polyurethane strut mounts, spring seats and jounce bumpers; conventional and hydraulic bushings; conventional and hydraulic body and cradle mounts; mass dampers; and dual durometer (bi-compound) bushings, among others.

According to Lewe, the acquisition will complement ContiTech’s product portfolio in terms of vehicle types.

“While Copper Standard’s anti-vibration business is focused on pickups, light trucks and SUVs, our focus is on passenger cars and European light trucks so far,” she noted.

The company also expects to further develop lightweight technology to support the future automotive industry.

“We complement each other in product space and customer base, and the combined business will drive innovations in lightweight and other anti-vibration products,” said Kai Fruehauf, head of Continental’s vibration control business unit, where the acquired business will be integrated into.

In a separate statement, Cooper Standard said it was divesting its AVS system as it would enable the company to further focus on its “core products”.

If the deal is approved, Cooper Standard's core product categories will reduce to three—rubber and plastic sealing, fuel and brake lines, and fluid transfer hoses. All three generated greater sales than the firm's AVS business.

Its sealing business is the largest at $1.91 billion, or more than half of the company's overall sales for 2017, while its fuel and brake and fluid transfer business generated $757.2 million and $521.6 million, respectively.

According to Cooper Standard chairman and CEO Jeff Edwards, the firm has set a goal for 25-30% of its revenue to come from non-automotive applications within the 2023-25 time period. Currently, its Advanced Technology Group accounted for less than 5%of the firm's $3.62 billion in consolidated 2017 sales.

Speaking to ERJ's sister publication Rubber & Plastics News has contributed to this report.