Continental A.G. has completed its acquisition of the U.S. rubber company Veyance Technologies Inc. of Fairlawn, Ohio, following approval by the Brazilian antitrust authority.
The transaction is valued at $1.4 billion euros, which is equivalent to $1.58 billion based on the exchange rate on Jan. 30, 2015.
Continental says it is boosting its worldwide industrial business with this acquisition, which is the most significant acquisition in recent corporate history. Veyance operations will be combined with Continental’s ContiTech division.
“By integrating Veyance in our ContiTech division, we are expanding our global position in rubber and plastics technologies. In addition, this acquisition will bring Continental a significant step closer to its strategic goal of further increasing the proportion of industrial and end-customer business in its sales,” says Dr. Elmar Degenhart, chairman of Continental’s executive board in Hanover, Germany.
“Continental has financed the acquisition entirely from liquid funds and available lines of credit. Veyance will make an immediate positive contribution to the corporation’s profitability.”
Veyance Technologies generates around half of its sales in the U.S. Other important markets include Latin America, Africa, China and other countries in Asia. The product focus is on conveyor belts, hoses and power transmission belts. In 2013, ContiTech and Veyance together achieved sales totaling some 5.4 billion euros and employed around 38,000 staff worldwide.
Because of the significance of the acquisition, antitrust authorities worldwide had spent the last eleven months scrutinizing the purchase and its impact on the respective markets, according to Continental.
In response to the structural concerns expressed by some of the antitrust authorities, Continental will divest Veyance’s air springs business in NAFTA and its current steel-cord belting business in Brazil. In total, around 600 employees work in the operations that are to be divested.
The ContiTech division supplies a host of technical rubber products and is a specialist for plastics technology. The division develops and produces functional parts, components and systems for the automotive industry and other industries.