Lear to buy leather supplier Eagle Ottawa for $800 million, reports say
DETROIT -- Lear Corp. is finalizing a deal to acquire automotive seat leather supplier Eagle Ottawa LLC, Crain’s Detroit Business reported, citing a source close to the deal.
Lear, based in Southfield, Mich., is expected to pay more than $800 million for Eagle Ottawa, the world’s largest supplier of leather to the automotive market.
Eagle Ottawa, based in Auburn Hills, Mich., declined to comment. Lear did not immediately return an email and phone call seeking comment.
Crain’s Detroit Business is an affiliate of Automotive News. Lear's plan to purchase Eagle Ottawa was reported earlier by The Wall Street Journal.
The deal for Eagle Ottawa, which is owned by Milwaukee-based investment firm Everett Smith Group, could be announced in the next couple of weeks, the Journal said.
Eagle Ottawa, which generates roughly $1 billion in annual revenue, supplies leather to more than 50 percent of all cars and light trucks on U.S. roads, including many models marketed by the Detroit 3, Pat Catlin, executive vice president of sales and marketing told Crain’s in a previous interview. Other customers include BMW and Mercedes-Benz.
The move by Lear to buy Eagle Ottawa comes as suppliers tap rising profits, cash and industry output to gain worldwide scale and consolidate within specific markets and product lines.
Magna International Inc., for example, is openly shopping for acquisitions valued at up to $4 billion, CEO Don Walker told Bloomberg recently.
German-based ZF Friedrichshafen AG is attempting to acquire TRW Automotive Holdings Corp. in Livonia, Mich., for more than $11 billion.
For Lear, it’s one of several acquisitions as the supplier strives to acquire global scale in the automotive seating business.
In 2012, Lear paid $257 million to acquire Wilmington, N.C.-based automotive textile supplier Guilford Mills. The deal allowed Lear to streamline seat production and takeover Guilford's existing contracts with BMW, Chrysler Group, Ford Motor Co. and others.
Earlier this year, Eagle Ottawa launched a process to recycle the scrap hide into a traditional leather alternative for the auto industry as automakers look to reduce costs and become more eco-friendly.
Eagle Ottawa invested $3 million at a plant in Rochester Hills, Mich., to build a recycled composition leather line.
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