Dana Corporation announced today that it has signed a definitive agreement to sell its automotive aftermarket business to The Cypress Group for approximately $1.1 billion in cash.
The transaction, which is expected to close in the third quarter of 2004, is subject to the purchaser’s receipt of financing from committed sources and other customary conditions, including the receipt of regulatory approvals.
Dana Chairman and CEO Michael Burns said proceeds from the sale will be used for a combination of reinvestment in the company’s core businesses, and a contribution to the company’s pension plans and further reduction of Dana’s debt, both of which would be expected to accelerate the company’s return to investment-grade status.
“The completed transaction will provide Dana with important strategic and financial flexibility, which will be used to further invigorate our core businesses and better serve our global original equipment customers,” Burns said. “Dana will be a more streamlined company that is better focused on delivering world-class component and systems solutions to our customers in the automotive, commercial vehicle, and off-highway markets.”
The sale includes 52 facilities employing approximately 13,000 people worldwide. Combined annual sales for these operations totaled approximately $2 billion in 2003. The transaction also involves several premier replacement product brands and a variety of under-vehicle components.
As previously announced, the business which Dana has agreed to sell does not include Dana’s distribution and marketing operations for its engine products, such as piston rings, gaskets, and engine bearings, which Dana will retain as part of its Automotive Systems Group.
“We believe the people of the automotive aftermarket business, its leadership team, and its customers will be well served by their new association with The Cypress Group, which has expressed its dedication to growing this business and fully optimizing opportunities moving forward,” Burns said.