Magna to acquire majority ownership of Chinese seating supplier
The deal increases Magna's footprint with seating supplier Honglizhixin from two to 12 manufacturing plants.
In a move to expand its seating capabilities across China, automotive parts supplier Magna International Inc. has signed an agreement to acquire majority ownership of Honglizhixin (HLZX), a seat supplier to Chinese automakers.
At the same time Magna will acquire a majority stake in its existing seating joint venture with HLZX.
The financial terms of the deals have not been disclosed.
The two companies currently operate a 50/50 joint venture formed in 2015.
In a statement, Aurora, Ont.-based Magna said it has a “strong relationship with HLZX over the years [that] has enabled agreements to deepen the partnership.” Magna said it has signed a Shareholder Agreement and Share Purchase Agreement and intends to finalize the deals by the beginning of 2021.
“China is an important market for Magna where we are committed to delivering high quality seat technology to both domestic and foreign automakers, as well as non-traditional startups in the area of mobility,” said John Wyskiel, president, Magna Seating. “HLZX runs an impressive business and we are proud to build upon our existing relationship and strengthen our competitiveness through increased vertical integration, additional manufacturing sites, and full engineering and testing.”
The current Magna-HLZX JV includes two manufacturing plants. Under the new ownership agreement, 10 plants will be added to Magna’s manufacturing footprint, adding critical mass and scale to the company’s seating operations in China. “The majority of HLZX’s plants are also vertically integrated with just-in-time seat assembly and delivery, structures, foam, and trim capabilities that enable an optimal sourcing solution for automakers versus sourcing from multiple suppliers,” Magna said.
“In addition to HLZX’s expansive presence, they have a highly capable and competitive engineering team in providing turnkey solutions to Chinese automakers,” said Jim Chen, vice president and managing director, Magna Seating Asia. “We believe both of our engineering teams working together will provide unique synergies that will allow us to deliver innovative seats to our customers in China.”
Globally, Magna’s seating business includes six R&D centres and 66 manufacturing operations.