Magna International Inc. plans to buy German manufacturer Getrag for 1.75 billion euros ($1.9 billion), giving North America’s biggest auto-parts maker control of one of the largest independent producers of vehicle transmissions.
Getrag’s enterprise value from the deal is about 2.45 billion euros, including 700 million euros in debt and pension liabilities, Aurora, Ontario-based Magna said in a statement. The companies plan to close the transaction by the end of 2015.
“We have identified the expansion of our powertrain business as a strategic priority,” Magna Chief Executive Officer Don Walker said in the statement. With its dual-clutch transmissions, “Getrag is a technology leader in a product area that we believe is well-positioned to benefit from industry trends that are driving increased vehicle fuel-efficiency and reduced emissions.”
The Canadian component maker’s powertrain-systems unit generated almost $5 billion in sales last year, or about 14 percent of total revenue. Getrag would fill a void at Magna by enabling it to offer a full transmission lineup, David Tyerman, a Toronto-based analyst with Canaccord Genuity, said before the deal was announced.
Magna rose 0.6 percent to $56.18 at 9:34 a.m. New York time after earlier jumping as much as 3.2 percent for the biggest intraday increase this month. The shares had gained 2.7 percent this year through Wednesday.
Getrag, founded in 1935 by Hermann Hagenmeyer, is based in Untergruppenbach, 44 kilometers (27 miles) away from the southwestern German carmaking hub of Stuttgart. It has a joint venture with Ford Motor Co. in Europe that also includes a three-way partnership in China with Jiangling Motors Group, and another in that country with Dongfeng Motor Group Co.
The family-owned company reported $3.6 billion in sales for 2013 and has a workforce of about 13,500 employees at 23 plants worldwide. German transmission rival ZF Friedrichshafen AG generates about 30 billion euros in annual revenue after the acquisition this year of TRW Automotive Holdings Corp. Perella Weinberg Partners advised Getrag on the transaction.
A union representing Getrag workers said it’s eager to speak with Magna about production and employment plans.
“On one hand, we regret that the founders of a traditional Baden-Wuerttemberg family-owned enterprise are selling the company,” Roman Zitzelsberger, regional head of the IG Metall labor union in the southern German state, said in an e-mailed statement. “On the other, we are pleased that a strategic investor has been found in Magna, as Getrag fits well with its portfolio of holdings. Our clear expectation is that jobs will be preserved and production sites will be secured for the future.”