PARIS - French auto supplier Valeo SA is looking for a major acquisition in the United States.
In an interview with the French weekly Journal des Finances, Chairman Noel Goutard named four U.S. companies that fit his general plans, and he raised Valeo's goal for non-European business.
'Many diversified American groups, such as AlliedSignal, Rockwell, ITT or Cooper Industries, are presently focusing on their core business and are trying to disinvest a number of their automotive components divisions,' Goutard was quoted as saying. 'These assets are spread all over the world. For a buyer, it is a way to strengthen its position in Europe and in North America as well.'
Goutard's directness was unusual. He is generally discreet with the press.
In 1997, on global sales up to 34 billion French francs ($5.6 billion), Valeo had 26 percent outside Europe. By 2002, Goutard said he wants 50 billion francs ($8.5 billion) in sales for Valeo, half of it outside Europe. That suggests buying $2.7 billion worth of non-Europe business.
'Our strategy obviously implies an international growth,' said Goutard. 'The targets that we've defined equally mean one or several acquisitions. To strengthen our business in the United States remains a priority.'
Marc Gouget, auto analyst with BNP Equities in Paris, said a big acquisition of around $1 billion 'will perfectly be consistent with Valeo's strategy. With $2 billion in equity, practically no debt and a stock market value around $7 billion, Valeo can easily do it.'
Valeo's equity reached $2 billion in December 1997, and net indebtedness is $220 million.
Aside from naming four potential targets, Goutard gave no details of his plans.
Recent activity at the four:
AlliedSignal Inc. has sold key automotive businesses in the last year, leaving AlliedSignal Automotive a much smaller supplier.
Rockwell International Corp. last year spun off its automotive operations into a new company, now named Meritor Automotive Inc.
ITT Industries Inc. is reviewing whether it should sell some of its ITT Automotive businesses, including antilock brakes.
Cooper Industries Inc. last month said it wants to sell its Cooper Automotive operation.
For Gouget, as well as other investors, he said, 'The question now is: What can be the target?
'Rockwell, now Meritor, could be one,' said Gouget. 'But Valeo may choose a company more focused on electronics, cockpit technology or another field, like suspension and chassis systems.'