Canada's Linamar offers $882 million to buy French supplier Montupet
LONDON/FRANKFURT (Reuters) -- Canadian supplier Linamar Corp. today offered 771 million euros ($882 million) in cash to acquire French peer Montupet SA.
Montupet, which is working with U.S. investment bank Jefferies, said its board is supporting Linamar's tender offer. The French company supplies valued-added aluminium castings and parts to a variety of automakers in Europe, including Volkswagen.
Linamar CEO Linda Hasenfratz said in a statement: "Montupet is a technical leader in the market, well known and respected for its engineering and processing expertise in the cylinder head segment in particular where we intend to grow and leverage our respective strengths.
"Our businesses are very complementary, with our finished machining strength and Montupet’s casting expertise, and we are remarkably aligned in our business philosophies, manufacturing discipline and employee dedication with strong values and culture given our family business approach."
Linamar said it has financing commitments for 100 percent of the cash offer. The offer, for $81.78 per share, represents a 15 percent premium over Montupet's closing stock price on Wednesday.
If the deal goes ahead, it would be the latest transaction carried out by a Canadian firm in Europe after Magna International Inc. bought German supplier Getrag for $1.9 billion in July.
"Montupet and Linamar complement each other very well combining leading expertise in casting and machining,” Montupet CEO Stéphane Magnan said in the statement.
The deal would also show that the scandal over Volkswagen cheating pollution emissions tests has not eroded confidence among industry players seeking to expand in Europe.
Montupet said in September that it had not been affected by the problems faced by Volkswagen, since it supplies Audi-brand V6 cylinder heads to Volkswagen, which are not linked to antipollution standards.
Mergers and acquisitions involving auto suppliers have reached a total of $43 billion so far this year, at an average premium of 20 percent, according to data compiled by Bloomberg. That compares with a total of $47.7 billion for the whole of last year. Auto-parts makers are consolidating to save costs and expand offerings as automakers prefer to work with fewer suppliers.
Based in Clichy, on the outskirts of Paris, Montupet serves a number of international carmakers including Renault, BMW, General Motors and Ford.
It employs more than 3,200 people and has a market capitalization of 668 million euros.
Earlier this year its management team, who owns around 37 percent of the company, expressed interest in selling their stake to an industrial partner active in the automotive industry and familiar with light-metal casting.
Analysts at Hamburg-based investment bank Berenberg said Montupet, led by the 64-year old CEO and chairman Stephane Magnan, was seeking a tie-up with an industry player as a way to expand into China.
Magnan has 11.69 percent of the company while executive managing directors Marc Majus and Didier Crozet, aged 67 and 66, respectively, own a combined 20.49 percent of the company.
Hasenfratz has often used mergers and acquisitions to boost Linamar's international footprint. The company carried a market cap of about $3.7 billion as of Wednesday.
Last year, it acquired a majority stake in German supplier Seissenschmidt.
A tie-up with Montupet would help it compete with larger industry rivals including Germany's ZF Friedrichshafen which swallowed U.S. rival TRW Automotive Holdings in 2014 to create the world's second-largest automotive supplier by sales.
In addition to France, Montupet is present in other European countries including Belgium and Spain, as well as the United States, India and Mexico.
In 2014, Montupet had revenues of 451.8 million euros and core earnings of 91.8 million euros.
Philip Nussel and Bloomberg contributed to this report.