Dana Corp. To Acquire Echlin
BRANFORD, Conn. (AP) _ Dana Corp. will acquire Echlin Inc. for $3.6 billion in a merger that combines a manufacturer of original equipment for new vehicles with a maker of parts to maintain and fix them.
The announcement Monday of the biggest merger ever in the auto-parts industry came at a time when Echlin was facing a hostile takeover bid by a Michigan rival.
Together, the companies would bring in about $13 billion in annual sales and have a market value of about $10 billion, said Dana, which is based in Toledo, Ohio.
The combined company expects to cut only about 1,500 jobs out of 80,000 jobs worldwide, said Paul Ryder, vice president of investment relations at Branford, Conn.-based Echlin.
``Both Dana and Echlin are business builders, not slashers,″ he said. ``They have both grown their businesses through acquisitions.″
The majority of Echlin’s business is supplying parts for the so-called aftermarket _ the maintenance and repair of vehicles. Dana mainly makes original equipment for new vehicles.
``This move will have the benefit of expanding our product line and significantly broadening and balancing our customer base,″ said Southwood J. Morcott, Dana’s chief executive. ``In short, Echlin helps us in the aftermarket. Dana helps Echlin in original equipment.″
Echlin called the merger a ``perfect fit.″
The merger, expected to close this fall, would give Dana two new core products _ brakes and engine fluid products _ each with combined sales of more than $1 billion.
Echlin shareholders would receive 0.9293 Dana shares for each Echlin share they own, making the merger worth $55 a share based on Friday’s closing prices.
Dana said the merger would result in $200 million in annual cost savings starting in 2000, once it is fully implemented.
The companies received support from their major customers, including the National Automotive Parts Association, which has 6,200 Napa Auto Parts stores and 8,300 affiliated repair shops around the country, Dow Jones Newswires reported.
Echlin has annual sales of $3.5 billion and 28,000 employees spread across six continents. Dana has annual sales of $8.3 billion and more than 50,000 employees.
Echlin employs about 900 people in Branford, where it has its corporate headquarters, a distribution center and manufacturing plant.
The company’s chairman and chief executive, Larry McCurdy, will become president of the Echlin strategic business unit of Dana, overseeing the aftermarket business.
Both companies said they plan to immediately consolidate their warehouses around the country, but specific locations were not released.
Echlin was facing a hostile takeover by SPX Corp. of Muskegon, Mich. Shareholders were expected to hold a special meeting by June 25 to decide on the company’s future.
On Monday, Echlin said its board unanimously voted to recommend that shareholders reject SPX’s exchange offer. SPX’s bid, announced in February, was worth $48 a share. Following Monday’s merger announcement, SPX said it is evaluating the situation and looking at its options.
``We will do what we conclude is in the best interest of SPX shareholders,″ the company said in a statement.
Echlin’s stock jumped $4 per share, or 8.4 percent, to $51.56 1/4 on the New York Stock Exchange. Dana’s shares fell $3.06 1/4, or 5 percent, to $59.18 3/4.
Shares of SPX rose $1.06 1/4 per share, or 1.5 percent, to $73.31 1/4.