BorgWarner seeks to buy Haldex AB’s traction unit for $205 million cash

Article by Christian A., on December 19, 2010

As part of efforts to expand into all-wheel-drive technology, BorgWarner Inc. is planning to buy the traction unit of Haldex AB -- Haldex Traction Systems -- for about $205 million in cash.

BorgWarner, the world's biggest maker of automatic-transmission parts, said that with this acquisition, it will get access to front-wheel and all-wheel drive technologies, gain a strong European customer base, and add to its current lineup of front and rear-wheel drive based products.

In a statement, BorgWarner Chief Executive Officer Timothy M. Manganello said that Haldex Traction Systems, “which is a strong and well-respected brand of all-wheel drive products,” will compliment its current portfolio as well as its customer and geographic mix.

It is expected that the deal will close in the first quarter of 2011, subject to standard regulatory approvals. Haldex’s traction unit customers include Volkswagen AG, General Motors Co. and the sport-utility vehicle unit of Tata Motors Ltd.'s Jaguar Land Rover division.

Haldex Traction Systems’ operating profit totaled SEK87 million on sales of SEK909 million. Haldex released a statement, revealing that the SEK1.43 billion ($211 million) cash transaction will result in a SEK1.1 billion capital gain.

Haldex Traction Systems CEO Joakim Olsson said that proceeds from the sale will be reinvested into Haldex's two remaining divisions and will be set aside for projects that may include acquisitions or may be used to pay investors.

Haldex Traction Systems specializes in the development and production of intelligent all-wheel drive (AWD) systems. In 1998, the unit released the first generation of the Haldex Coupling (Gen I), which found its way into the Audi TT, Audi S3 8L and Volkswagen Golf with an electronically controlled hydraulic-mechanical All-Wheel-Drive concept.

Since then, company Haldex Traction Systems manufactured several generations of products licensed to and customized for some major auto brands, which then marketed Haldex Traction AWD under different names. In April 2009, Haldex Traction Systems disclosed a SEK4.5-billion deal to provide Volkswagen with a new AWD system for the carmaker’s new modular platform that will be introduced in 2012. This would become the fifth generation of the Haldex Coupling.

Headquartered in Auburn Hills, Michigan, BorgWarner Inc. is an American global supplier of components and parts for the automotive industry. Its products include manual and automatic transmissions as well as gearbox components.

The original Borg-Warner Corporation was established in 1928 with the merger of Warner Gear, Borg & Beck, Marvel Schelber Carburetor Co. and the Mechanics Universal Joint Co. Warner Gear founded by Thomas Warner in 1901 while Borg & Beck was established by Charles Borg and Marshall Beck in 1903. Marvel Schelber Carburetor Co. was set up by George Schebler in 1905.

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