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LucasVarity Acquires Leading South American Brakes Manufacturer

8 January 1998

LucasVarity Acquires Leading South American Brakes Manufacturer

    LONDON, Jan. 8 -- Further to the announcement made on 23
October 1997, LucasVarity plc (London: LVA, NYSE: LVA) announced today that it
has secured the leading position in brakes system manufacturing in South
America, following its acquisition for US $115 million (70.6 million pounds
sterling) in cash of the 66% of the voting shares of Freios Varga it did not
already own.
    The shares acquired were held principally by Varga Participacoes Ltda.
    Freios Varga is South America's largest brakes manufacturer, with sales
for the nine months ended 30 September 1997 of US $242.9 million (149 million
pounds) and pre-tax profit of US $17.5 million (l0.7 million pounds).  Net
assets at 3O September 1997 were US $102 million (62.6 million pounds).  For
the year ended 31 December 1996 its sales were US $267 million (163.8 million
pounds) and pre-tax profit was US $12.2 million (7.5 million pounds).  Net
assets at 31 December 1996 were US $101.5 million (62.3 million pounds).
    "We are delighted with this acquisition", said Victor Rice, Chief
Executive of LucasVarity.  "Through it we have secured a strong position in a
significant growth market.  The acquisition fits excellently with our strategy
to focus our resources on securing and sustaining leadership positions in
those markets of the automotive and aerospace sectors where we possess core
competencies and which offer attractive growth prospects."
    A joint venture partner of Lucas Industries since 1969, Varga produces
light and heavy vehicle brake components, including ABS, calipers, rotors,
drum brakes, corner modules, boosters and brake fluid.  Its major customers
include Volkswagen, General Motors, Ford, Chrysler and Mercedes-Benz.
    "We are pleased to welcome this excellent company into our organisation,"
said Steve Lunn, Managing Director of LucasVarity's Light Vehicle Braking
Systems division.  "Early in the next decade, Brazil is expected to become the
world's fourth-largest vehicle manufacturer and by then we expect Varga's
share to account for around 40 percent of the Brazilian brake industry.
Moreover, we anticipate continued expansion of demand for its exports to other
South American markets and the United States.  These exports are forecast to
represent about one-third of Varga's total output by 2000."
    With 2,500 employees, Varga has manufacturing plants and technical centres
in Brazil, Argentina and the United States.  Its manufacturing facilities at
its headquarters in Limeira, Brazil, and at Coelho, Brazil, are certified
under QS-9000 quality standards required by General Motors, Ford and Chrysler.
It has won customer awards from GM, Ford, Chrysler, Mercedes and VW.
    Headquartered in Livonia, Michigan, the Light Vehicle Braking Systems
division of LucasVarity supplies braking components to the majority of
automobile manufacturers in the world.
    LucasVarity designs, manufacturers and supplies advanced technology
systems and services to the world's automotive and aerospace industries.

SOURCE  LucasVarity plc