TRADE : Mexican Bus Maker in Talks to Take Over U.S. Bus Firm

A Mexican company would buy a major American bus maker under a $337-million deal that would be the first big cross-border takeover of a U.S. business since Congress approved the North American Free Trade Agreement.

Motor Coach Industries International Inc. agreed in principle to be taken over by Consorcio G Grupo Dina SA de CV in a stock swap, the two companies said Tuesday.

Dina describes itself as Mexico’s biggest producer of trucks and inter-city buses. Motor Coach, spun off from Dial Corp. in August, makes inter-city and transit buses but has said it is getting out of the transit bus business.

Motor Coach downplayed the timing of the deal, but some NAFTA experts called it a sign of the times.

“You’re going to see more of this,” said Carol Colombo, a Phoenix lawyer who represents U.S. and Mexican companies and professionals in international business.

Mexican companies will become more active in acquisitions and joint ventures with U.S. companies in order to remain competitive as the treaty eliminates trade barriers, she said.

Jose Velasco, executive director of the Arizona-Mexico Commission, said that, unlike earlier periods of capital flight from Mexico, this deal shows that Mexico’s economy is strong enough that companies are looking beyond their borders to invest for profit.

“I really believe that this serves to relieve the criticism put to NAFTA--especially by Ross Perot--that Mexicans don’t have a lot of money,” Velasco said.

Motor Coach shareholders would get $16.72 worth of a new class of Dina stock for each share of Motor Coach they own. Motor Coach had 20,135,000 shares outstanding as of Sept. 30.

The agreement-in-principle must be approved by both companies’ boards, shareholders and the Federal Trade Commission. The deal also is contingent on Motor Coach ending or amending certain agreements with its Canadian subsidiary, Motor Coach Industries Ltd.

Craig Lentzsch, Motor Coach executive vice president for finance, said the merger would help the new company compete in the growing Mexican market while remaining in the large and more stable U.S. market.

“I think this deal works without NAFTA and it works with NAFTA,” Lentzsch said.

Motor Coach makes intercity coaches at plants in Winnipeg, Canada, and Pembina, N.D. It makes transit buses in Roswell, N.M., and near Schenectady, N.Y.

The deal with Dina, expected to be concluded in the second quarter of 1994, would not affect Motor Coach’s previously announced plan to sell or shut down its transit-bus operations by late 1994, Lentzsch said.

The Phoenix-based company employs about 3,300 people, including 1,000 in the transit-bus operations. Of those, 900 are in New Mexico and 100 are in New York.

Lentzsch would not rule out wholesale shifts of assembly line work, but he said current factory jobs should be safe for now.

“We don’t see any significant production relocations as a result of this transaction in the near future,” Lentzsch said. “The Mexican company makes a quality product for their market; we make a quality product for our market. I believe that our plans would be to continue to do just that.”