DETROIT -- Lear Corp. took issue with a report by Merrill Lynch analyst John Murphy, who said Lear is tripping over the first phase of a restructuring plan announced last fall that involves a joint venture with financier Wilbur Ross.
International Automotive Components Group, a company controlled by Wilbur Ross, said on Thursday, March 2, that it had completed the acquisition of most of Collins & Aikman Corp.'s European division. Ross is chairman and CEO of New York-based private-equity firm WL Ross & Co. L.L.C., and is planning to build three large automotive supplies with about $4.5 billion in capital.
Last week's deal did not include Lear, which announced last October the framework of an agreement to form a joint venture with Ross to pursue the acquisition of all or part of Collins & Aikman, which filed for Chapter 11 bankruptcy last year.
Lear disputes Merrill Lynch's conclusions.
"Right at the moment we are in the process of negotiating with (Ross) over what is our European interiors business and deciding whether or not to contribute that to the joint venture," said Mel Stephens, Lear's vice president of investor relations and corporate communications. "There is no change, there is no tripping and there is no anything that is implied by this report."
Murphy, who said on Friday, March 3, that he stands by his report, also is troubled by the departure of Lear CFO David Wajsgras, who was leading the negotiations with Ross.
Last week it was also announced that Lear Vice President of Corporate Development Thomas Saeli will become CEO of metal processor Noble International Ltd. of Warren, Mich.
"Unfortunately, the lack of news of any progress on the joint venture during the last four months, a few key sticking points, and the departure of point person David Wajsgras seem to have made Lear a much less likely partner in this joint venture," Murphy said in his report.
Murphy also said mounting price pressure in the interior segment of the automotive industry is making it more difficult for Lear to negotiate with Ross.
"If the current trajectory of Lear's business does not change drastically, Wilbur Ross could be picking up the assets he'd like out of Lear at a much lower price and avoid the currently difficult negotiating process," Murphy said.
Lear announced Wajsgras' departure Feb. 22. Wajsgras left to take a similar post at Raytheon Co., and Lear Vice Chairman James Vandenberghe is now serving as interim CFO.
Stephens said Saeli was not directly involved in the talks with Ross. Plus, Stephens said, the framework agreement to form a joint venture with Ross remains intact.
He said Wajsgras reported to Vandenberghe, who has been involved in the discussions with Ross and has about 30 years of experience at Lear.
"(Vandenberghe) is now going to become CFO, and he's going to take over responsibility for negotiating the deal," Stephens said. "We are really not expecting to miss a beat."
Lear Corp. ranks No. 7 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $17.0 billion in 2004.