Johnson Controls forms JV for Plastech’s interiors business
Plymouth, Mich.-based Johnson Controls has announced that it will form a joint venture to acquire the interior prod...
Plymouth, Mich.-based Johnson Controls has announced that it will form a joint venture to acquire the interior product assets of bankrupt Dearborn, Mich.-based auto parts supplier Plastech Engineered Products.
As part of the agreement, Johnson Controls will own 70 per cent of the joint venture. It contributed US$135 million in cash and five injection molding plants to the joint venture.
The company expects the transaction to negatively impact its fourth quarter earnings by approximately US$0.03 per share, but said it is expected to break even in 2009.
The joint venture will include 29 plants in North America, and will manufacture injection molded components and assemblies such as door panels and floor consoles.
Johnson Controls is the largest customer of the joint venture. Annual sales are expected to total US$1.2 billion, with $500 to $600 million being incremental to its parent company.
“Through this new joint venture we are better able to leverage our scale and operational excellence to improve quality and profitability. It also creates a strong and reliable supplier for our customers who have been very supportive of our plans,” said Jeff Williams, group vice president and general manger, North America for the Automotive Experience business of Johnson Controls. “Johnson Controls has consistently expressed its commitment to growth in the automotive interiors business and we believe today’s transaction will help us achieve that goal.”
The deal comes after Aurora, Ont.-based Magna International Inc.‘s Decoma International purchased Plastech Engineered Product’s exterior products for US$24.7 million in June.
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