Magna Int'l to acquire GETRAG in 1.75 billion euro deal

Magna International Inc today announced that it has signed an agreement to acquire the GETRAG Group of companies, one of the world's largest suppliers of automotive transmissions. 

GETRAG has an 80-year history in transmissions and is a technology leader, offering a range of transmission systems which include manual, automated-manual, dual-clutch, hybrid and other advanced systems. 

Magna says the architecture of GETRAG's product line is well-positioned to support current and future automotive powertrain configurations. In particular, GETRAG is a leader in the growing market for dual-clutch transmissions (DCTs), which is expected to be one of the highest growth segments globally over the next decade. 

In addition to its wholly-owned operations, GETRAG has significant joint-venture relationships with Ford, as well as Chinese auto makers Jiangling and Dongfeng. Other customers include BMW, Daimler, Renault, Volvo and Great Wall. Including joint-venture locations, GETRAG has approximately 13,500 employees and operates 13 manufacturing and 10 engineering centres in nine countries in Europe, Asia and North America.

GETRAG's 2014 consolidated sales were approximately 1.7 billion euros (Rs 12,994 crore), which excludes approximately 1.6 billion euros (Rs 12,230 crore) in sales generated in its non-consolidated joint-ventures.

Don Walker, Magna's Chief Executive Officer, commented: "As part of our ongoing product portfolio review, we have identified the expansion of our powertrain business as a strategic priority. GETRAG is an excellent fit with this strategy. GETRAG is a technology leader in a product area that we believe is well-positioned to benefit from industry trends that are driving increased vehicle fuel-efficiency and reduced emissions. GETRAG's joint venture relationships also provide significant growth potential in China, the world's largest automotive market and the fastest growing market for DCTs.  Lastly, GETRAG has a highly capable and experienced workforce, including deep powertrain engineering expertise."

Mihir Kotecha, CEO of GETRAG (pictured above), said: “We join forces with a reliable, experienced and well-performing global company. This move will bring both sides extraordinary benefits. GETRAG will join forces with a Top 5 global automotive supplier, transforming its business to a whole new level. Magna is acquiring a well-positioned company that has significantly increased its turnover since 2009 and invested 1 billion euros into facilities and global expansion during the past decade.”

He added: “GETRAG has also invested significantly in engineering new products and sustainable technologies like manual and dual clutch transmissions, hybrid and other transmissions. The company has diversified its customer base, consisting of many of the world’s largest car manufacturers.”

“With Magna as the new owner, GETRAG will become even more robust to market fluctuations. The combined businesses will be able to fully participate in the technology changes the car industry is facing. Electrification will reshape the sector comprehensively, requiring high investments from OEMs and suppliers.

There is also an increasing need for large and well-capitalised suppliers to have an even more global presence. We are very happy that Magna is completely committed to GETRAG's existing strategy.”

How much is Magna paying?
The purchase price for 100% of the equity of GETRAG is approximately 1.75 billion euros (Rs 13,377 crore). This represents an enterprise value of approximately 2.45 billion euros (Rs 18,727 crore) less proportionate net debt and proportionate pension liabilities, which together are estimated to be approximately 700 million euros (Rs 5,350 crore) at closing. The purchase price is subject to working capital and other customary purchase price adjustments. 

The transaction is expected to close near the end of 2015, subject to a number of conditions including obtaining all necessary regulatory approvals.

Magna International currently has 316 manufacturing operations and 87 product development, engineering and sales centres in 29 countries. It has around 133,000 employees and its product capabilities include producing body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing.