The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Midas Will Enter Into Strategic Alliance With Magneti Marelli

2 October 1998

Midas Will Enter Into Strategic Alliance With Magneti Marelli and Will Sell Its European Operations to Magneti Marelli

    CHICAGO--Oct. 1, 1998--Midas, Inc. , and Magneti Marelli, S.p.A., a member of the Fiat Group, announced today that a definitive agreement has been reached to form a strategic alliance to develop the Midas program in the business of fast auto service repair in Europe and South America.
    Midas is one of the world's largest providers of automotive service, including exhaust, brakes, steering and suspension, as well as batteries and maintenance services. There are more than 2,700 Midas locations in 19 countries.
    In Europe, Midas entered France and Belgium in 1976 and now also has operations in Austria, Italy, Poland, Spain and Switzerland. Midas has 438 shops in Europe, of which 187 are currently owned by Midas and 251 are owned by franchisees.
    Magneti Marelli is an international leader in the design and production of high-tech components, systems and modules for the automotive industry.
    With a turnover of more than $4.2 billion, 45 plants worldwide and a workforce of 33,500, including a research-and-development staff of 2,200, Magneti Marelli ranks among the major companies in the manufacture of automotive electronics, instrument clusters, lighting, electronic fuel-injection systems, air conditioning and engine cooling systems, fuel delivery systems, starters and alternators, exhaust systems, rear view mirrors, shock absorbers and lubricants.
    As part of the alliance, Midas will sell its interests in Europe to Magneti Marelli and will enter into a long-term license agreement for which Midas will receive $100 million at closing and on-going royalties throughout the term of the license agreement. The 438 automotive service shops in Europe will continue to operate using the Midas name.
    The alliance calls for Midas and Magneti Marelli to cooperate on development and expansion of the Midas program worldwide.
    The agreement was announced by Wendel H. Province, chairman and chief executive officer of Midas, and Domenico Bordone, president and chief executive officer of Magneti Marelli of Milan, Italy.
    The transaction, subject to completion of due diligence and other required authorizations, is expected to close by the end of October.
    "While there is potential for significant market growth in Europe, we believe that Midas is better served by focusing our financial and human resources on strategic opportunities in North America, where Midas is a market leader with nearly 2,150 Midas shops and where Midas is a major supplier of exhaust, brake and suspension parts and batteries to our franchisees," Province said. "Magneti Marelli, with its financial and human resources and its skills in European aftermarket activities, is in a prime position to grow Midas Europe to levels that Midas could not achieve on its own in the foreseeable future."
    Bordone of Magneti Marelli said, "This agreement forms part of the Group's long-term strategy, which calls for a wider offering of services to our customers.
    "The strategic alliance with Midas and the acquisition of Midas interests in Europe allow Magneti Marelli to enter into a new business which is consistent with such strategy," Bordone said.
    "This alliance will strengthen Midas' short-term and long-term financial position and provide significant growth opportunities to both parties," Province said.
    Province said that proceeds from the transaction will be used to retire debt and for investment in Midas' business operations in North America, where the company is in the process of re-engineering its distribution and retailing systems and refurbishing its stores.
    Province also said, "Investing the proceeds from this transaction in our business and the North American focus of our newly formed management team will enable Midas to concentrate on aggressively capturing a larger portion of the $100 billion auto repair business here. In addition, as part of our strategic repositioning, a special charge in the fourth quarter may be required."

    NOTE: This news release contains certain forward-looking statements that are based on management's beliefs as well as assumptions made by and information currently available to management. Such statements are subject to risks and uncertainties, both known and unknown, that could cause actual results, performance or achievement to vary materially from those expressed or implied in the forward-looking statements. The company may experience significant fluctuations in future results, performance or achievements due to a number of economic competitive, governmental, technological or other factors. Additional information with respect to these and other factors which could materially affect the company and its operations are included in the company's filings with the Securities and Exchange Commission, including the company's 1997 annual report on Form 10-K.