Cubic Corp. is negotiating to sell half its U.S. Elevator Corp. subsidiary to Thyssen Aufzuge GMBH, a Neuhausen, Germany-based conglomerate, the companies said Thursday.
Financial terms of the deal were not disclosed. The two companies hope to complete a final agreement by year's end, said William Boyle, chief financial officer of San Diego-based Cubic.
The proposed deal will not generate significant changes for U.S. Elevator's 1,100 employees in San Diego and around the country, Boyle said. U.S. Elevator, which also has a maquiladora plant across the border in Mexico, is the nation's sixth-largest elevator manufacturing and servicing company.
Cubic and Thyssen intend to create a joint venture in the United States that probably would be based in San Diego, Boyle said.
The proposed deal is in keeping with a worldwide consolidation trend in the elevator industry, said William Sturgeon, editor of Mobile, Ala.-based Elevator World magazine. Earlier, Swiss-based Schindler Holding Ltd. acquired Westinghouse's Pittsburgh-based elevator business, and Finland's KONE Corp. acquired Louisville, Ky.-based Armor Elevator.
U.S. Elevator generated $3.3 million of Cubic's $23.5 million in consolidated 1991 operating profits and $102 million of its $317 million in revenue.
Thyssen, which has interests in steel, machinery and elevators, reported $16.8 billion in 1991 revenue, including about $1 billion in revenue from its European elevator subsidiary.
Thyssen initiated negotiations with Cubic, according to Boyle.
"We were not shopping the company," he said. Cubic intends to use cash generated by the sale "to invest elsewhere, which, in the longer run, should enable us to grow faster and enhance shareholder value," Boyle said.
If completed, the deal would give Thyssen, now the world's sixth-largest elevator company, a major presence in the United States, Sturgeon said. Thyssen now owns small elevator operations in Toronto and Massachusetts.
Thyssen earlier announced its intention to expand its elevator business internationally, said Hans Christian Haas, an industry analyst with New York-based ABD Securities.
While U.S. Elevator ranks sixth among the nation's elevator manufacturing and servicing companies, "it's never really achieved national coverage," Sturgeon said, adding that the deal should give the company the ability to grow and access to Thyssen's technology.
Cubic closed up $.25 at $15 on Thursday in American Stock Exchange trading.