ArvinMeritor to sell Emissions Technologies for $310M

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ArvinMeritor announced Friday, Feb. 2, that it has signed a definitive agreement to sell its Emissions Technologies business group to One Equity Partners, an equity investment firm based in New York. Cash and other consideration total about $310 million. ArvinMeritor also recently announced announced the formation of a long-term supplier partnership with Trailmobile Corp., based in Lake Forest, Ill.

The sale of Emissions Technologies to OEP is expected to be completed in the third quarter of fiscal year 2007. “The decision to sell our Emissions Technologies business is part of our long-term strategy to refocus our company and concentrate on the strengths and core competencies that will generate future earnings growth for ArvinMeritor,” says Charles G. “Chip” McClure, chairman, chief executive officer and president of Troy, Mich.-based ArvinMeritor. “The proceeds from this sale will support our continued efforts to strengthen our balance sheet, and increase our ability to invest in technology, research and development that more closely aligns with our strategic focus on selected vehicle systems.

“By focusing on and investing in our light and commercial vehicle businesses where we have superior products, strong market positions and higher margins, we see greater potential for sustained profitable growth in our core capabilities,” McClure says. These include:

  • Chassis — vehicle stability (ride and handling — braking and suspension systems and wheels);
  • Drivetrain — vehicle propulsion (steer axles, drivelines, suspensions, trailer axles and all-wheel drive systems and hybrids); and
  • Apertures — vehicle safety and security (body and control systems, such as doors and roofs).
  • “We continue to be committed to diversifying our customer base, expanding our global presence and strengthening our product portfolio in areas that provide the highest value to our customers and return the greatest value to our shareowners,” McClure says. “In addition, we are implementing an aggressive strategy in Asia, and committing resources to sustainable and profitable growth in this region. We also are planning to increase our global aftermarket and specialty businesses, and we are funding advanced engineering, research and development initiatives that will better position us for the challenges ahead.”

    ArvinMeritor’s overarching strategy is to become a global systems leader in its target markets, to build product technology and develop capabilities that are scalable across markets and platforms, and to profitably commercialize solutions that meet customers’ growing needs.

    “ArvinMeritor’s new Performance Plus program also is helping to transform the company by identifying revenue growth and cost savings opportunities that will position us for future global expansion and success,” McClure says. “Together with the transaction we are announcing today, Performance Plus will help us build a more focused, sustainable and profitable business model for ArvinMeritor.”

    Regarding Emissions Technologies, McClure says that “while we are confident in the growth potential of the Emissions Technologies portfolio, we believe that this business will be better served by an organization that is specifically positioned to invest capital and
    management resources in its development and growth.”

    “OEP is looking forward to working with the Emissions Technologies management team to execute a focused and aggressive growth plan,” says Lee Gardner, OEP senior partner. “We believe that the worldwide push to reduce pollutants and greenhouse gas emissions will create long-term opportunities for companies focused on advanced exhaust and emissions technology, and we are very pleased to be acquiring a leading company in this industry. We will seek to build on the competitive strengths of the business and position it for
    long-term success.”

    The Emissions Technologies business is a leader in the global emissions technology industry, serving worldwide light and commercial vehicle manufacturers. The business has operations in 19 countries, 7,500 employees and several long-term joint venture relationships. H. H. “Buddy” Wacaser, president of Emissions Technologies, and his management team will continue to lead it following the close of the transaction. Once the transaction closes, the new Emissions Technologies company will have dual headquarters in Columbus, Ind., as well as in the metro Detroit area.

    JPMorgan Securities is providing the debt financing in connection with this transaction, which is subject to standard regulatory approvals, including review under the Hart-Scott-Rodino Antitrust Improvements Act; consultation with employee representatives also will take place. After the sale of its Emissions Technologies business, ArvinMeritor will have about 20,000 employees, with 75 facilities in 22 countries.

    Trailmobile pact
    Effective this month, Meritor trailer axles, brakes and air suspensions become the standard offering on all Trailmobile trailers. Trailmobile Corp. is one of North America’s top trailer manufacturers with manufacturing operations in Mississauga, Ontario, Canada.

    “We’re delighted to offer our customers the Meritor quality brand in axles, brakes and air suspension systems,” says Tom Wiseman, president of Trailmobile.

    Assembled at the company’s Frankfort, Ky., production facility, ArvinMeritor will supply axles, cam brakes, the new rugged and robust RideSentry air suspension, automatic slack adjusters, wheel ends and — when specified — the Meritor Tire Inflation System by P.S.I. Trailmobile also outfits its trailers with Meritor WABCO anti-lock and advanced braking systems.

    “With an intense effort at supplying high-quality component systems through highly efficient delivery processes, we’re elated to be selected by Trailmobile,” says Sergio Carvalho, vice president and general manager of ArvinMeritor Trailer Systems business. “It speaks volumes for our people who work so hard to satisfy and delight our customers.”