BorgWarner buys German exhaust-gas technology specialist

Related Topics

BorgWarner Inc., the U.S. supplier that produces a variety of fuel-efficient powertrain components, said it has agreed to acquire Germany’s Gustav Wahler GmbH, a company that specializes in exhaust gas recirculation products.

Wahler expects to generate revenue of about $350 million for 2013 and employs 1,250 people in Germany, Brazil, U.S., China and Slovakia, serving automotive customers that include Daimler, Volkswagen, BMW, and General Motors.

BorgWarner did not disclose terms of the deal, which is expected to close in the first quarter of 2014.

"From both a technology and geography standpoint, this acquisition is an excellent strategic fit," said BorgWarner CEO James Verrier said in a statement on Tuesday. "The acquisition strengthens BorgWarner's strategic position as a producer of complete EGR [exhaust gas recirculation] systems and creates additional market opportunities in both passenger and commercial vehicle applications."

EGR technologies can help reduce exhaust emissions and improve fuel economy in both diesel and gasoline engines. BorgWarner said Wahler’s European customer base, along with BorgWarner’s existing EGR business, will boost the supplier’s presence in the EGR segment.

Analysts agreed.

“Wahler better positions the company to capitalize on EGR systems opportunity expected to grow nearly 10 percent annually through 2018,” Baird analysts wrote in a report today. “While EGR systems on diesel engines are more prevalent today, early stages of adoption on gasoline engines significantly broadens EGR market opportunity on passenger cars.”

Baird said it expects the company’s EGR business for gasoline engines to grow 21 percent annually. Wahler has generated average growth of about 10 percent annually over the past two decades, the report said.

Baird projected the value of the acquisition -- based on the value of three other recent auto supplier acquisitions -- would be equal to Wahler's annual revenue, or $350 million.

BorgWarner is based in suburban Detroit and ranks No. 29 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $7.2 billion in 2012.

You can reach Philip Nussel at pnussel@crain.com.


advertising
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

Or submit an online comment below. (Terms and Conditions)




Rocket Fuel