BorgWarner to Acquire Haldex's All-Wheel-Drive Division for $205 Million

BorgWarner Inc., the world’s biggest maker of automatic-transmission parts, agreed to buy Haldex AB’s traction unit to add all-wheel drive equipment sales in Europe.

The 1.43 billion-krona ($205 million) cash transaction may contribute less than 5 cents a share to BorgWarner’s annual profit, said David Leiker, an analyst with Robert W. Baird & Co. A 5-cent-a-share increase would be about $5.68 million, based on the company’s shares outstanding as of Oct. 20.

The unit, which sells to Volvo AB, Tata Motors Ltd.’s Land Rover and General Motors Co.’s Opel, may have more than $205 million in revenue next year, BorgWarner said in a statement.

“It’s strategic, but small,” Leiker, who is based in Milwaukee, said today in an interview. “This is one of BorgWarner’s core technologies and this gets them into a region of the world where they’re underrepresented.”

BorgWarner, based in Auburn Hills, Michigan, is benefiting as automakers work to make vehicles with higher gas mileage and lower emissions. Third-quarter profit increased sixfold as demand for turbochargers rose and China’s car industry expanded. The company bought Vigo, Spain-based Dytech Ensa SL in April, gaining a manufacturer of exhaust-emission reduction products.

BorgWarner rose 29 cents to $71.05 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have more than doubled this year.

Haldex Gain

The sale will result in a 1.1 billion-krona capital gain for Haldex, the Stockholm-based company said in a statement. Haldex will use the proceeds for its two remaining divisions and projects such as acquisitions or return it to shareholders, Chief Executive Officer Joakim Olsson said in an interview.

Haldex’s sale of the traction unit reverses a plan announced in July to split into three listed companies. The disposal “will provide superior value to shareholders,” the company said today.

Nine-month operating profit at the traction business totaled 87 million kronor on sales of 909 million kronor. The unit has about 329 employees and factories in Hungary, Sweden and Mexico, Haldex said.

Auto-parts makers have been involved in 317 acquisitions announced this year that were completed or still are pending, according to data compiled by Bloomberg. The total value of the transactions is about $12 billion.

To contact the reporters on this story: Janina Pfalzer in Stockholm at jpfalzer@bloomberg.net; Mark Clothier in Southfield, Michigan, at mclothier@bloomberg.net.

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net. Jamie Butters at jbutters@bloomberg.net.

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