Textron Sells Car Unit for $1 Billion

Textron Inc., which makes Bell helicopters and Cessna aircraft, agreed Tuesday to sell its car-trim unit to Collins & Aikman Corp. for about $1.3 billion to rely less on the automotive industry.

Collins & Aikman, the largest maker of automotive carpets, would pay $1 billion in cash, 18 million common shares valued at about $90 million, and $245 million in preferred stock of the company’s Collins & Aikman Products Co. unit, said Susan Bishop, a Textron spokeswoman.

Textron, which cut profit estimates three times this year as auto production slowed, would reduce its share of sales to the industry to about 9% from 23%, said Phua Young, a Merrill Lynch & Co. analyst.

Troy, Mich.-based Textron Automotive Trim, which had $1.87 billion in sales last year, makes plastic door moldings, instrument panels, consoles and armrests.

Collins & Aikman is 60% owned by Heartland Industrial Partners, a buyout firm headed by former Reagan administration official David Stockman. The company would issue 32 million common shares to Heartland and other investors to finance the purchase of the Textron unit. All common stock, including the shares paid to Textron, would be priced at $5.

The transaction would double Troy, Mich.-based Collins & Aikman’s sales to about $3.9 billion, its work force to more than 25,000 employees and its plants and facilities to 123 locations in North America, Europe and South America.

Shares of Providence, R.I.-based Textron rose $1.90 to $56.90 on the New York Stock Exchange. They have dropped 4.2% in the last year. Collins & Aikman fell 1 cent to $8.19, also on the NYSE. It has gained 41% in the last year.

Textron also agreed to sell a unit that makes components for aircraft engines to UC Acquisitions Inc., a closely held holding company that owns Utica Corp. The unit had $125 million in sales last year. Terms of the transaction weren’t disclosed.

Textron plans to use at least $800 million in proceeds from the two sales to buy back stock and retire debt. The company authorized the repurchase of as many as 12 million shares, superseding an existing 3.2-million-share buyback program.

The deal would be Bloomfield Hills, Mich.-based Heartland Industrial’s fifth acquisition or purchase of a controlling stake of an auto-parts company in the last 10 months.