A British company's plan to buy fuel tank maker Walbro Corp. will create a combination that can provide a complete fuel system from the gas nozzle to the engine.
Walbro, based in Auburn Hills, Mich., is one of the world's largest producers of plastic fuel tanks, plus other parts for fuel storage and delivery, including fuel pumps, sensors and fuel-sending units.
TI Group PLC, meanwhile, owns Bundy Group, a supplier of fluid-handling systems based in Warren, Mich. TI plans to mesh the automotive operations of Walbro and Bundy under the banner of TI Automotive Systems. Bundy is one of the world's largest producers of fuel and vapor lines.
The combined Bundy-Walbro operations will give TI the capability to make a complete fuel system, said James Katzoff, executive vice president of TI Group Inc., a TI holding company in New York. 'We can combine the businesses and come up with a unique global leadership role,' he said.
Bundy already commands about 25 percent of the fuel and vapor line market worldwide, said James Davis, president of Bundy Group of North America. The company recorded about $1.3 billion in global 1998 sales. It ranks No. 46 on the Automotive News list of the biggest original equipment suppliers to North America.
Walbro is No. 113, with $268 million in OE sales to North America and $497 million globally.
Davis said the move will create a 'fuel-system portfolio' that will meet automakers' needs for systems and modules.
Walbro, a publicly traded company founded 49 years ago, has hit hard times in recent years.
Walbro spent $350 million from 1994-97 building and acquiring 10 new plants. The company lost $36.6 million in 1997 before rebounding to a $3.7 million profit last year.
'We didn't want to go into an economic downturn as highly leveraged as we currently were,' said Walbro CFO Michael Shope.
The TI Group, based in Abingdon, England, offered Walbro shareholders $20 for each of the company's 8.7 million shares outstanding. The offer is valued at $570 million, including $388 million in Walbro debt.
Walbro CEO Frank Bauchiero has agreed to head TI Automotive Systems for at least three years, Shope said.