Delphi, SPX Buy Auto-Parts Units for Expansion
Eaton Corp. said Monday that it agreed to sell its automotive vehicle-switch and electronics division to Delphi Automotive Systems Corp., the world’s largest auto-parts maker, for $300 million in cash.
Separately, SPX Corp., a maker of auto parts and other industrial components, said Monday that it will buy United Dominion Industries Ltd. for $954 million in stock to expand its international reach.
Each deal is expected to add to the buyer’s earnings in the first full year.
The acquisitions come at a time of consolidation in several sectors of the auto-parts industry, which has been hurt by the major car manufacturers’ production cuts in response to the slowing economy and inflated inventories.
Cleveland-based Eaton indicated in August that it would sell its vehicle-switch and electronics division and concentrate on its other businesses. It said the auto-switch market is consolidating because of the industrywide move away from individual parts toward more integrated car cockpit panels.
Delphi said the acquisition will make it the third-largest auto-switch producer and allow it to diversify its customer base. The Troy, Mich.-based company estimates the global auto-switch market, currently about $3.8 billion, will exceed $7 billion by 2010.
The Eaton unit, based in Downers Grove, Ill., employs about 3,850 people and had sales of about $320 million last year. Eaton will use sale proceeds to pay down debt.
Under the SPX-United Dominion agreement, SPX will pay 0.2353 of a share for every United Dominion share, or about $25 apiece.
Muskegon, Mich.-based SPX, which also will assume $876 million in debt, said the purchase will double its revenue to $5 billion and expand its international presence.
Charlotte, N.C.-based United Dominion gets about a third of its revenue from outside the U.S.
Eaton shares closed off 5 cents at $73.15, while Delphi fell 44 cents to close at $14.71, both on the New York Stock Exchange. Shares of SPX fell $8.08 to close at $95.52 and United Dominion rose $2.38 to close at $21.88, also on the NYSE.
