PARIS - The price of becoming one of just two global suppliers of complete automotive interiors was high, but French supplier Faurecia is set to face off against Lear Corp.
Faurecia Chairman Pierre Levi agreed to pay $1.24 billion for the automotive operations of Sommer-Allibert SA, the French cockpit, trim and carpeting supplier. Levi outbid seating rivals Lear, Johnson Controls Inc. and Magna International Inc., according to two sources close to the deal.
With the acquisition, Faurecia (pronounced four-see-uh) changes the global landscape among interiors suppliers. Faurecia joins Lear as one of few companies able to provide a complete interior anywhere in the world.
Neither Magna nor Johnson Controls manufacture automotive carpeting in North America. Visteon Corp. and Delphi Automotive Systems Corp. are also missing one or more pieces from being a complete interior supplier, says analyst Greg Janicki of CSM Worldwide in Northville, Michigan, USA.
The acquisition makes the Boulogne, France, automotive group Europe's No. 1 supplier of interiors and enlarges its presence in North America, Faurecia's Levi said in an interview.
'We will become a force to be reckoned with in the automotive world,' said Levi, who agreed to pay a premium of 20 percent over Sommer-Allibert's share price to gain the size he believes is needed in the auto industry.
French automaker PSA/Peugeot-Citroen, Faurecia's parent company and largest shareholder with 52.6 percent of equity, played a key role in the deal. It will buy SIT, the holding company that controls Sommer-Allibert of Nanterre, France, then give it to Faurecia. In exchange, PSA's stake in Faurecia will rise to 70 percent.
Faurecia will have a diversified customer portfolio. Volkswagen, PSA and Renault-Nissan will make up 55 percent of sales planned in 2003, but Ford, GM and DaimlerChrysler will be significant customers as well with respectively 12, 10 and 7 percent of sales. Faurecia recently gained a huge contract in seats for the next generation of GM vehicles based on the Epsilon platform. Sommer-Allibert also won a significant contract for door panels with Ford.
In 1999 Faurecia sales reached E4.8 billion, while Sommer Allibert posted E2.1 billion in revenues. In 2000 Faurecia, including Sommer Allibert, will have estimated combined sales of E8.1 billion (5.6 for Faurecia, 2.5 for Sommer-Allibert).
The new group, to be named Faurecia, holds strong positions in seats, ranking first in Europe and third worldwide after Lear and JCI, and cockpits, ranking first in Europe and second worldwide after Visteon, exhausts systems (first in Europe, third worldwide).
Faurecia is building a North American presence. It added an exhaust systems business with its 1999 acquisition of AP Automotive Systems Inc. of Toledo, Ohio, USA. It is talking to a North American automaker about a front-end module, which would be its first such deal here.
But Faurecia still lacks seating capacity in North America. It plans to build four or five new plants in North America for the GM Epsilon global car platform, which includes future editions of the Chevrolet Malibu, Oldsmobile Alero, Pontiac Grand Am, Saturn L series and Opel Vectra.
Faurecia will still be a European-focused group, with 80 percent of sales in Europe, 12 percent in North America and 5 percent in Asia. Developing business in the US and Japan remains a priority for Levi.
'They fit together beautifully,' said Kevin Mann, a consultant at CSM in Europe. Faurecia is 'exceptionally strong in seating systems but a lot weaker when it comes to interior trim and cockpits.'