BorgWarner to sell spark plug business to Champion parent
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DETROIT -- Powertrain supplier Federal-Mogul Corp., owner of the Champion spark plug brand, said today it has agreed to buy BorgWarner Inc.’s Beru spark plug division for an undisclosed price.
The agreement awaits customary due diligence as well as Federal Trade Commission approval.
As part of the deal, Federal-Mogul gets spark plug plants in Chazelles sur Lyon, France, and Neuhaus, Germany, which have about 500 employees combined. The plants will be Federal-Mogul’s first manufacturing presence in the two countries, a spokesman said.
Federal-Mogul CEO Rainer Jueckstock, in a statement, said the move will expand his company’s geographic reach.
“The increased manufacturing capacity in Europe will place us closer to our customers and positions Federal-Mogul well for further market share growth,” Jueckstock said. “With this acquisition the Federal-Mogul ignition business has a diverse customer base, proven global work force and very capable product development and manufacturing processes in all major regions.”
Beru’s spark plug operations, which were acquired by BorgWarner in a 2005 acquisition, will be integrated into Federal-Mogul’s Champion unit, the company said. The acquisition will create an additional $80 million in annual sales and enable Federal-Mogul to produce more than 350 million spark plugs a year.
Jueckstock said the acquisition of a spark plug manufacturer is critical to his company’s success in the powertrain sector.
“The spark plug is a core technology in automotive powertrains. Spark ignition engines are forecasted to remain the dominant ignition technology for the foreseeable future and we intend to be a leader in this market,” Jueckstock said.
Jueckstock indicated that Federal-Mogul wants to improve spark plugs.
“Our developments are fundamental to increasing spark energy, improving temperature resistance, enhancing durability and reducing packaging size. We are utilizing precious metal electrode designs and specially formulated ceramic insulators to achieve smaller diameter and higher performance spark plugs to meet demanding market requirements,” Jueckstock said.
BorgWarner will take a pretax loss of between $50 million and $60 million after the sale, the company said in a statement.
Federal-Mogul, which is majority owned by longtime Wall Street investor Carl Icahn, ranks No. 46 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $4.59 billion in 2011.
BorgWarner, of suburban Detroit, ranks No. 27 on the list, with worldwide parts sales to automakers of $7.12 billion in 2011.
You can reach Adam Rubenfire at arubenfire@crain.com.
