Lear targets acquisitions to enhance electrical unit

TRAVERSE CITY, Mich. (Bloomberg) -- Lear Corp. is looking for acquisitions of as much as $1 billion for its electrical unit as automakers' demand for global vehicle platforms drives consolidation among their suppliers.

Lear already is the second-largest maker of auto seating and gets about three-quarters of its revenue from that business.

But the electrical unit, which supplies control parts and systems, is more profitable, generating 46 percent of operating earnings last year from about a quarter of the company's $17.7 billion in sales.

The push is to add capability in software, data encryption and cloud computing, CEO Matt Simoncini said in an interview Thursday at the CAR Management Briefing Seminars here.

"You'll see more and more non-traditional acquisitions of software firms that bring intellectual property into the firm from outside of automotive and that's an area where we've been very actively looking," he said.

Auto sales in the U.S., led by pickups and SUVs, are surging, helping fuel a spurt of mergers among auto parts makers, including ZF Friedrichshafen AG's May acquisition of TRW Automotive Holdings Corp. to create the industry's second-largest supplier.

A resurgent U.S. economy, widely available credit and low interest rates are keeping the sales pace near levels not seen in a decade or more.

Lear's search to expand its electrical unit is "driven less by the margins and more because there are more areas to grow there," he said. "The industry is exploding in that sub-segment and it requires you to keep up with certain capabilities, in our case software as you move from moving electricity to moving data."

The Southfield, Michigan-based supplier's last two acquisitions were to strengthen its seating unit.

In January, Lear bought Eagle Ottawa, a maker of leather for auto interiors, for $850 million. In 2012, it acquired fabric maker Guilford Mills for $257 million.

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