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The eBearing News
July 20, 2004
Cypress Group Acquiring
Dana's Automotive Aftermarket Group
copyright © 2004 eBearing Inc.
Dana Corporation (USA) announced it has agreed to divest its Automotive Aftermarket Group to private
equity buyout firm The Cypress Group (USA) for USD $1.1 billion in cash.
Dana describes its Automotive Aftermarket Group as providing
replacement parts and components for 95% of the world's vehicle population, offering, "a wide range of
under-hood and under-vehicle products for the global replacement parts market."
Included in the Group are Raybestos brakes, Spicer chassis components, Wix filters, Beck/Arnley
import parts. The division is divided into three groups: Under Vehicle (brake and chassis parts),
Under Hood (Clevite Engine Parts and Beck/Arnley Specialty Products, Wix and Dana), and European
Aftermarket (Clevite, Filtron, Glaser, Perfect Circle, Quinton Hazell, Wix). Quinton Hazell carries
wheel bearings, transmission bearings and clutch release bearings in its product lines, as the
Beck/Arnley division does for import applications.
Several bearing-related business operations are not included, because they are primarily
OEM manufacturers with a secondary aftermarket business. Glacier Vandervell Bearings, consisting
of Glacier Vandervell North America's three operations in Ohio and Iowa, along with Glacier
Vandervell Europe with six operations in the UK, France, Italy, Slovakia and another in Brazil.
Overall, Glacier Vandervell engine bearing's OEM and aftermarket operations employ over 3,000 people worldwide.
Clevite is a brand name now used by Dana's aftermarket engine bearing sales operations, although it traces
back to Clevite Corporation, which became a brand name when it merged with Cleveland Graphite Bronze Company
(formerly Dann Spring Insert Company) in 1952. Forming the historical circle, Vandervell Products Ltd.
got its start in the UK with thinwall bearing manufacturing equipment purchased from
Cleveland Graphite Bronze. CGB later renamed itself Clevite Corp, then became part of Gould,
Imperial Clevite and T&N plc. Federal-Mogul acquired T&N, and Dana acquired the Clevite operations
from Federal-Mogul. Meanwhile, Vandervell and Glacier had merged in 1988.
Dana's sale does not include its Clevite Engine Parts aftermarket bearing distribution and marketing
operations in Ann Arbor, Michigan; Churubusco, Indiana; Collierville, Tennessee; or Olive Branch, Mississippi.
In December 2003, Dana confirmed widespread rumors by formally announcing the aftermarket unit was for sale,
hiring Goldman Sachs and Credit Suisse First Boston to handle the divestiture. By February 2004, Dana said it
was in active negotiations with several potential acquirers, both strategic and financial, European and American.
Dana's aftermarket operations, which once contributed strongly to bottom-line results due to their relatively
high margins, have recently been squeezed by declining demand as original parts improve in quality and in the face
of strong pricing pressure from overseas manufacturers.
The current thinking is that these aftermarket operations can be made more profitable again, but their owners
are reluctant to invest the needed time and talent to get the job done. The Blackstone Group recently purchased
TRW's aftermarket operations under similar circumstances.
• article: Blackstone Group acquires TRW Automotive
Dana originally expected to get as much as $1 billion for the unit, when Carlyle Group was the front runner.
Carlyle had originally partnered with Blackstone in the TRW deal, but bowed out early. Carlyle then
acquired Rexnord and its bearing manufacturing divisions from Invensys plc. in late 2002.
• article: Carlyle Group acquires Rexnord from Invensys for $880 million
The $1.1 billion deal with Cypress Group was slightly above analyst expectations.
Subject to regulatory approval and funding, Dana said the deal should close during third quarter 2004.
Dana's aftermarket operation includes 52 facilities worldwide, employing over 13,000 people and generating
almost $2 billion in sales.
Michael Burns, Dana's Chairman and CEO, said proceeds from the sale will be used for a combination of reinvestment
in the company's core businesses, contribution to its pension plans, and reduction of Dana's debt. Those moves,
he said, should help Dana recapture an investment-grade status on Wall Street.
"The completed transaction will provide Dana with important strategic and financial flexibility, which will be used
to further invigorate our core businesses and better serve our global original equipment customers," Mr. Burns
said. "Dana will be a more streamlined company that is better focused on delivering world-class component and systems
solutions to our customers in the automotive, commercial vehicle, and off-highway markets."
Mr. Burns went on to say, "We believe the people of the automotive aftermarket business, its leadership team, and
its customers will be well served by their new association with The Cypress Group, which has expressed its dedication
to growing this business and fully optimizing opportunities moving forward."
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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