FRANKFURT -- Japan's Nisshinbo Holdings Inc. will buy German brake producer TMD Friction Group in a deal that will create the world's largest automotive brake friction manufacturer.
The move comes as Japanese companies are trying to diversify production into markets outside Japan in the face of a saturated home market and an increasingly strong yen.
Nisshinbo, a textile maker that has diversified into such areas as automobile braking systems, said the deal will help the two companies complement each other in terms of geographical business coverage.
"Together, we will have a strong presence in all major automotive sectors with an extensive global customer base and minimal geographic overlap. We see several opportunities to leverage our combined technology, geographic knowledge and customer networks,'' Koji Nishihara, Nisshinbo president, said in a statement on Monday.
NISH's brake business is operated globally by Nisshinbo Brake Inc. (NISB) , which has production bases in countries such as the USA, China, Japan and India.
TMD, which is owned by the private equity firm Pamplona Capital Management, has 13 production plants and r&d centers in eight countries including Germany, France, Brazil and China. It employs 4,500 people.
TMD has enjoyed rising sales in fast growing regions such as China, Brazil and the independent aftermarket. In 2010, the company reported that sales rose 20 percent to 637 million euros.
The deal is scheduled to take place by the end of November pending competition authority approval. Following completion, Nisshinbo will continue to operate TMD as an independent, wholly owned subsidiary.
TMD with NISB will have combined revenues of over 1 billion euros.