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€1.4bn deal adds Goodyear Engineered brand to ContiTech
The German automotive and power transmission giant Continental is buying Veyance Technologies – which sells products under the Goodyear Engineered Products brand – for around €1.4bn. The acquisition, from the US-based Carlyle Group, will join Continental’s ContiTech division, boosting its industrial presence. The combined business will have sales worth around €5.4bn, and will employ about 39,000 people worldwide.
Veyance is active globally in the field of rubber and plastics technology and in 2013 recorded sales of around €1.5bn, 90% of which came from outside the automotive industry. Veyance, whose headquarters are in Ohio, has 27 plants around the world and a workforce of around 9,000 employees. About half of its sales are in the US and its product portfolio includes conveyor belts, hoses, power transmission belts and air springs.
“Veyance’s business and geographic presence complements Continental’s existing global footprint, and the planned integration of Veyance into our ContiTech division will expand our position in rubber and plastics technologies on a worldwide basis,” says Continental’s chairman, Dr Elmar Degenhart. “Furthermore, this acquisition will enable Continental to come a step closer to its strategic goal of increasing further our proportion of sales to industrial customers and private end-users.
“ContiTech itself will achieve some 60% of its sales outside the automotive OE sector in future,” he adds. “Veyance will make an immediate positive contribution to the corporation’s profitability once the transaction has been concluded.”
The Veyance acquisition will also boost ContiTech’s activities in key markets where its presence is currently limited – particularly in the US and South America.
“Plants in Mexico, Canada, China, Australia and also South Africa will provide additional opportunities,“ explains ContiTech’s CEO, Heinz-Gerhard Wente. “Veyance and ContiTech complement each other geographically, and ContiTech’s conveyor belt group and fluid technology business units, in particular, will benefit from an enhanced global presence. The power transmission group and air spring systems will also achieve positive results from the merger.”
The Carlyle Group acquired the Goodyear Engineered Products business from Goodyear Tire & Rubber in 2007, and licenced the Goodyear name. It called the acquired business Veyance, which is an amalgam of “convey” and “performance”.
After the deal closes, ContiTech will be allowed to continue using the Goodyear brand for a limited period. But ContiTech does not regard this as a problem because it says that both Continental as a corporate brand and ContiTech as a product brand are well-known in the relevant markets and among the relevant customers.
ContiTech is not planning to remove the Veyance brand from the market. After the transaction closes, it will examine each market with former Veyance personnel and adjust its brand strategy accordingly.
The acquisition is subject to the approval of anti-trust authorities.
