DETROIT --Private equity firm Ripplewood Holdings LLC of New York bolstered its automotive castings group on Tuesday by buying Honsel International Technologies Holding of Meschede, Germany, from the Carlyle Group.
Honsel, a maker of aluminum and magnesium parts such as engine blocks, transmission housings and suspension components, has annual sales of about $1.06 billion. Its customers include BMW AG, DaimlerChrysler AG, Audi and PSA Peugeot Citroen.
Richard Donnelly, who heads Ripplewoods auto efforts, would not disclose the price paid for Honsel. In September, sources familiar with the deal had expected the price to be at least $750 million.
Honsel, which has plants in Germany and Canada, is Ripplewoods second casting acquisition. In June 2003, it bought control of Asahi Tech Corp. of Shizuoka, Japan.
The two companies are the start of an effort to create a global auto casting supplier, says Donnelly, who retired as head of General Motors Europe in 1999 after a 35-year career with the automaker.
Honsel has six plants in Germany, two in France and one in Brazil. The Canadian unit, known as ACT, has five plants. Asahi has plants in Japan and Thailand.
Donnelly becomes Honsels chairman. Joining him on the board of directors is Tom Stallkamp, the former DaimlerChrysler vice chairman who has also joined Ripplewood as an industrial partner in its automotive group.
A key attraction of Honsel was its expertise in lightweight metals, Stallkamp says. Automakers will have to use more aluminum and magnesium in future vehicles to meet fuel economy and emissions mandates, he says.
Donnelly adds, They have a book of business that Tom and I have never seen before. The contracts for 2008 are larger than their current book of business. We did not expect to see that.
He says that most contracts for powertrain-related components run from eight to 12 years, and that automakers rarely switch suppliers of such key parts in the middle of a contract.
There are no plans to merge Honsel and Asahi, Donnelly says but it is a possibility in the future. Ripplewood continues to look for other casting companies to fill out its global strategy.
The equity firm has a second automotive group centered on electric switches, formed by buying Niles Ltd. of Tokyo from Nissan Motor Co. Ltd. in 2001 and Micro Craft Inc. of Novi, Mich., in 2003.
Donnelly says his strategy is to have three automotive groups, but he still hasnt settled on a third product group.