BorgWarner may break up Beru, says former boss

Ludwigsburg, Germany. Parts of the German supplier Beru could be sold off following a take over by U.S.-based BorgWarner, says a former Beru executive.

Former Beru boss Ulrich Ruetz says BorgWarner may sell parts of the company to recoup some of the high price it will pay for Beru.

BorgWarner expects to close a deal to buy Beru for 621 million euros in January.

Beru CEO Marco von Maltzan denied that parts of the company will be sold off or that some of Beru's 1,500 employees in Germany will lose their jobs.

"This speculation is completely unfounded," he said.

Von Maltzan told Automobilwoche that BorgWarner has promised him "the employment situation would not change."

However, von Maltzan admitted he does not know what BorgWarner's plans are for Beru.

Von Maltzan pointed to several positive factors for Beru if the deal goes through:

  • Its products do not overlap with BorgWarner's.

  • Its ignition technology business -- including sparkplugs for gasoline engines, wire sets and switches -- is highly profitable.

  • BorgWarner is interested in Beru's electronics know-how.

    But it is uncertain if BorgWarner will keep all of Beru's business areas. Beru's spare and accessory parts business, which has a wide product range, could be sold at a good price because it is profitable.

    BorgWarner is likely to keep Beru's diesel technology -- specifically, glow plugs -- and sensors.

    BorgWarner may need to raise its already-generous offer to Beru's major shareholders (67.50 euros a share) in the next round of negotiations.

    The sellers -- financial investor Carlyle and the Birkel family, who made their money in the food industry -- have already received an offer of about 60 euros per share.

    Rolf Woller, an analyst with HypoVereinsbank, called BorgWarner's offer "one of the most expensive takeovers of the last four years."

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