BorgWarner To Buy Remy International In $1.2 Bln Deal

(RTTNews) - Automotive parts maker BorgWarner Inc. (BWA) said Monday that it has agreed to acquire Remy International, Inc. (REMY), a producer of rotating electrical components for automobiles. The transaction implies an enterprise value of about $1.2 billion for Remy International.

Under the terms of the deal, BorgWarner will acquire all of the outstanding shares of Remy International for $29.50 in cash. The offer price represents a 44 percent premium to Remy's closing stock price of $20.53 on Friday.

Auburn Hills, Michigan-based BorgWarner sells engineered automotive systems and components primarily for powertrain applications worldwide. The company has operating manufacturing and technical facilities in 58 locations in 19 countries.

Founded by the Remy brothers in 1896, Pendleton, Indiana-based Remy International makes starter motors and alternators for light vehicle and commercial vehicle applications. The company's products are marketed under the Remy and Delco Remy brands.

The completion of the transaction is subject to certain customary terms and conditions, including the approval of Remy International's stockholders. The companies expect the transaction to close in the fourth quarter of 2015.

BorgWarner said it has identified purchasing efficiencies, redundant public company expenses, other cost synergies and several opportunities to accelerate growth through the combined business. The company expects the transaction to be accretive to its earnings in the first year.

Remy International has key technologies and operations in ten countries on five different continents. As of December 31, 2014 the company employed 6,600 people and for the fiscal year, generated sales of $1.2 billion.

James Verrier, President and CEO of BorgWarner said, "Their products and capabilities will strengthen BorgWarner's position in the rapidly developing powertrain electrification trend. The acquisition will be another step in executing our plan, to profitably grow revenue to $15 billion by 2020."

John Weber, Chairman of Remy said, "It provides an opportunity to market our products to a much broader and diverse group of original equipment manufacturers. The product and technology synergies are obvious, resulting from each company's historical focus on separate areas of the global powertrain market."

BofA Merrill Lynch acted as financial advisor to BorgWarner, while Sidley Austin LLP provided legal advice.

For Remy International, UBS Investment Bank acted as financial advisor, while Sullivan & Cromwell LLP provided legal advice.

BWA closed Friday's trading at $53.63, up $0.35 or 0.66 percent on a volume of 2.54 million shares.

REMY closed Friday's trading at $20.53. In Monday's pre-market activity, the stock is up $8.59 or 41.78 percent to $29.15.