DETROIT - A family-owned auto supplier that boldly tried to keep pace with the giants gave up the quest last week.
Charles Becker, whose father founded a suburban Detroit tool shop 44 years ago, said he would sell the family business, Becker Group, to one of the nation's biggest auto suppliers.
Johnson Controls Inc. will pay $550 million to $600 million in cash plus an estimated $325 million in assumed debt to acquire the maker of interior trim.
For Charles Becker, the deal closes the book on a crusade to stay independent by turning the family's tooling company into a modern mega-supplier.
In recent years, Becker Group had lured outside executives, landed big contracts and swallowed a European company nearly twice its size - all in an effort to compete with its bigger, publicly traded rivals.
Many of those executives are now gone. A big contract has been lost. And for the second time in two years, Johnson Controls has added a well-known, family-owned supplier to its growing empire.
The deal is not quite as large as Johnson Controls' $1.3 billion purchase of Prince Corp. nearly two years ago. And in the United States at least, it does not appear the Becker operation will remain a distinct unit within Johnson Controls, as Prince has.
But Becker Group provides plums on two continents:
Becker is Europe's second-largest producer of interior trim. It will give Johnson Controls the ability to design and produce every major interior component for its European customers.
Megatech Engineering Inc. is a $75 million operation that employs more than 1,000 designers and engineers. Megatech handles Becker's engineering and prototyping work. John Barth, Johnson Controls' executive vice president, described Megatech as 'one of the keys in maintaining our leadership' in engineering.
The deal also reflects Johnson Controls' latest gambit in its continuing chess game with archrival Lear Corp. In February, Lear said it would buy Delphi Automotive Systems' seat business for $1.2 billion. Johnson Controls was among the bidders.
Johnson Controls ranks 4th on Automotive News' list of top suppliers of original equipment parts to North America, with Lear a close No. 5. Becker Group is 72nd.
INTO THE BIG TIME
Becker Group dates back to 1954, when Leonard Becker launched Perfect Mold Co., a maker of molds and tooling.
After a series of acquisitions, the company renamed itself Becker Group in 1987. Company President Charles Becker made his move into the big time in 1996, when he purchased Gebr. Happich GmbH, Europe's second-largest maker of interior trim.
It was a daring move, since Happich was nearly twice the size of Becker Group. To manage his growing empire, Charles Becker hired Robert Albert, a former Dow Chemical executive, to be COO.
He also challenged larger rivals - such as Lear, Johnson Controls and Magna International Inc. - who were vying to design entire vehicle interiors. Becker Group scored a coup when Chrysler Corp. asked it to design the Plymouth Prowler's cockpit.
But Charles Becker found himself enmeshed in policy differences with Albert, said a former company executive and other sources.
Becker favored a lean organization that kept long-term research and development expenditures low. But Albert wanted to beef up the company's long-range r&d effort, then find customers for his new products, the former manager said.
The two men also had their personal differences. Albert had handpicked his management team. But Becker - like many successful entrepreneurs - was reluctant to give up much control.
'Chuck feels very strongly about how things ought to be done,' the former executive said. 'He is a one-on-one guy. If he has an issue, he confronts it directly.'
After 18 months on the job, Albert resigned in July 1997, and several of his top managers followed him out the door.
Meanwhile, competitors were beginning to eat into Becker Group's business. Last fall, Chrysler decided to switch suppliers for its next-generation minivan, due in 2001. The automaker awarded the minivan's interior trim contract to Textron Automotive Inc. - a major blow for Becker.
'Becker was not able to secure new business with his (North American) customers,' said one competitor. 'He was hoping to muscle in on Magna, Lear and Johnson Controls. But the big guys are very well connected.'
SEEKING AN ALLY
In September, Becker decided to seek an ally. He discussed a possible partnership with Johnson Controls, although Becker said he did not initially consider selling the company. After three or four months, the two companies began to consider a full-scale buyout, Becker said.
'We felt it was better for our customers and employees to link up with someone to make us a bigger and better player,' he explained.
Becker said he did not discuss a possible merger with any other supplier. Becker also said he wants to remain with the organization, but his future role is undecided.
'It's premature,' Becker said. 'We are still in conversation.'
With the proposed purchase of Becker Group, Johnson Controls appears poised to become Europe's dominant supplier of automotive interiors.
In 1997, the combined European sales of the two companies totaled $2.9 billion. The deal opens a substantial margin between Johnson Controls and Lear, which reported $2 billion in European sales.
About 70 percent of Becker's $1.3 bil-lion sales are in Europe, where the company is a leading supplier of door panels, instrument panels, headliners and consoles. Major customers include Daimler-Benz AG, Volkswagen AG, Renault and Audi.
During a press briefing last week, Barth said he plans to make Becker's European division his interior trim flagship.
Barth said the European operation would enjoy a status within Johnson Controls similar to that of Prince Corp., a trim manufacturer in Holland, Mich.
Wall Street appears to be cautiously bullish on the deal. In two days of moderate trading after the deal was unveiled, Johnson Controls' stock rose to $58.06 per share, up from $56.62.
Industry analyst Gary Lapidus of the brokerage firm Sanford C. Bernstein predicted that Becker will generate small profits for Johnson Controls by 1999.
'Strategically, the deal does make sense,' Lapidus said. 'It fills some product gaps in interior systems, especially instrument panels.'
However, Moody's Investors Service announced plans to review the company's credit rating, signaling a possible downgrade. Johnson Controls still is paring its debt load from its Prince acquisition in 1996.