DETROIT (Bloomberg) -- BorgWarner Inc., the world's biggest maker of automatic-transmission parts, plans to buy Haldex AB's traction unit for about $205 million in cash to expand into all-wheel-drive technology.
The acquisition will add front-wheel and all-wheel drive technologies, with a strong European customer base, to BorgWarner's existing portfolio of front and rear-wheel drive based products, the company said.
"With the acquisition of Haldex Traction Systems, BorgWarner has added a strong and well-respected brand of all-wheel drive products that will compliment our current portfolio as well as our customer and geographic mix," BorgWarner CEO Timothy M. Manganello said in a statement.
The deal is expected to close in the first quarter of 2011 and is subject to standard regulatory approvals.
The traction unit's customers include Volkswagen AG, General Motors Co. and the sport-utility vehicle unit of Tata Motors Ltd.'s Jaguar Land Rover division, Haldex said. Nine- month operating profit at the traction business, which makes all-wheel-drive systems for cars, totaled 87 million kronor on sales of 909 million kronor.
The 1.43 billion-krona ($211 million) cash transaction will result in a 1.1 billion-krona capital gain, Stockholm-based Haldex said today in a statement. Proceeds from the sale will be reinvested with Haldex's two remaining divisions and may be also used for projects such as acquisitions or paid to investors, Chief Executive Officer Joakim Olsson said in an interview.
BorgWarner posted a sixfold increase in third-quarter profit as demand for turbochargers increased and China's car industry expanded. The U.S. company bought Vigo, Spain-based Dytech Ensa SL in April, gaining a manufacturer of exhaust-emission reduction products.
Haldex's sale of the traction unit reverses a plan announced in July to split into three companies. The disposal “will provide superior value to shareholders,” the company said today.
The Swedish manufacturer still aims to sell stock in the commercial-vehicle and hydraulic systems divisions, and it's not working on alternative plans, Olsson said.