Icahn's Federal-Mogul Looks to Expand in Eastern Europe, China

  • Company plans to add manufacturing facilities, Co-CEO says
  • Ninivaggi sees `some idea' on Icahn buyout offer by summer

Federal-Mogul Holdings Corp., the auto-parts supplier controlled by billionaire Carl Icahn, is looking to expand its manufacturing facilities in eastern Europe and China to tap growth opportunities, co-Chief Executive Officer Daniel Ninivaggi said.

After investing 50 million euros ($56 million) so far to boost production at its two plants in Romania, Federal-Mogul already has plans to grow that output further this year and is also looking for other potential acquisition targets in the region, in addition to China, Ninivaggi said in an interview in Bucharest on Wednesday.

Federal-Mogul has more than $400 million available for investments this year and is prepared to spend even more if it identifies what Ninivaggi calls “strategic initiatives” for expansion in new markets and development of new products.

“In our core product lines, we’re setting up manufacturing in new markets, most of that is organic growth,” he said. “Places like China and eastern Europe, I expect we will continue to set up new manufacturing facilities and engineering centers.”

Seeking Growth

As the auto-parts industry in mature markets like North America and Europe witnesses “low single-digit growth,” Ninivaggi sees China, eastern Europe and to some extent India as the main places that can boost sales.

With Federal-Mogul’s shareholders expected to decide on a buyout offer from Icahn, the company’s largest shareholder, Ninivaggi said a response on the $212.8 million offer for an 18 percent stake may emerge by summer.

A committee of independent directors reviewing the offer for the Southfield, Michigan-based company “should have some idea” by summer as the “process normally takes three to five months,” Ninivaggi said.

If Icahn succeeds in buying the rest of Federal-Mogul, he will be able to string together three companies that deal in automotive parts. Icahn Enterprises LP also owns service and retail chains Pep Boys and Auto Plus, which the parent company could use to guarantee sales of Federal-Mogul products such as Anco wiper blades, Champion spark plugs and Wagner brake parts in his sales channel.

“I don’t think it will actually impact much of what we do,” Ninivaggi said. “The businesses are run separately, we obviously do business together, but the business will continue to be managed on a separate basis.”

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