MERITOR AUTOMOTIVE INC. is expanding its presence in Europe and adding to its product portfolio in the USA with the proposed acquisition of LucasVarity's heavy-brake operation.
Meritor, based in Michigan, said it would acquire the Heavy Vehicle Braking Systems unit from London-based LucasVarity for $390 million in cash. The deal is expected to go through in January.
LucasVarity announced in August that it wanted to sell its heavy brake business, which did $290 million in sales for the fiscal year that ended 31 January.
At that time, the supplier said the business could not sustain a leadership position on its own in the increasingly consolidated heavy brake segment.
The spin-off fits nicely with Meritor's plans to broaden its original equipment and aftermarket heavy brake operation, particularly in Europe. And, Meritor said, the combination of the two businesses results in little overlap of product lines.
The LucasVarity components unit makes air disc brakes, hubs, drums and hydraulic brakes. Meritor builds foundation brakes, automatic slack adjusters, wedge brakes, air disc brakes, antilock braking systems, air dryers and valves.
Meritor has yet to determine how its air-brake business will be combined with LucasVarity's, spokes-man Mike Pennington said. Installation rates for air brakes are much higher in Europe than North America. But the addition of hydraulic brakes to Meritor's product line should open up some opportunities with medium-duty truckmakers in North America, he added.
LucasVarity's heavy-brake business, based in Dayton, Ohio, has 1,800 employees and seven plants and technical centers in North America and Europe. Sales are divided evenly between Europe and North America.
According to Meritor estimates, LucasVarity has North America market shares of about 30 percent for hydraulic brakes and 20 percent for wheel end systems, which include hubs, drums and brakes. In Europe, Meritor estimates that LucasVarity has about one-third of the foundation brake market for both air and hydraulic systems.
Automotive News Europe ranks Meritor as the 27th largest original-equipment supplier to North America. LucasVarity ranks 19th.