Borg-Warner Automotive Buys Cooling Systems From Eaton; Acquisition Expands Engine Technology Base
1 October 1999
Borg-Warner Automotive Buys Cooling Systems From Eaton; Acquisition Expands Engine Technology Base
CLEVELAND--Oct. 1, 1999--Borg-Warner Automotive, Inc. today announced that it has completed the acquisition of the Fluid Power Division of Eaton Corporation , one of the world's leading manufacturers of powertrain cooling solutions for the global automotive industry, for $310 million. Borg-Warner said it expects the transaction to be accretive to earnings, and both companies expect Eaton's interest in Fluid Power's Ningbo, China joint venture to be transferred in the next few weeks."The acquisition of this premier technology from Eaton is a great strategic fit for us, offers excellent profitability and provides management depth for us as we grow the business," said John F. Fiedler, chairman and chief executive officer of Borg-Warner Automotive. "We are now positioned to globalize a modular cooling systems approach across a full range of vehicle types, further serve markets in Europe and developing nations, and enhance our overall growth opportunities in engine-related components and systems. Engine technology is currently the fastest growing segment of our business and we expect it to account for over 50% of our sales in 2000." Fiedler added that innovations and changes in cooling system designs are driven by the need to help customers meet increasingly stringent global fuel and emission standards.
Eaton Chairman Stephen R. Hardis said, "The Eaton Fluid Power Division had achieved operational and technical leadership in its markets. However, we felt it would be difficult for Eaton to maintain those positions considering the dramatic realignment of individual component manufacturers to provide complete engine cooling systems solutions."
Borg-Warner Automotive will combine its existing cooling systems business with that acquired from Eaton to form Borg-Warner Automotive Cooling Systems. John McGill, formerly head of the Eaton division, has been named president and general manager of the new operating group reporting to John Fiedler. Bruce Dufour of Borg-Warner Automotive, has been named senior vice president, sales and marketing.
The Eaton Fluid Power Division, with 1998 sales of approximately $190 million, designs and produces a variety of viscous fan drive cooling systems primarily for passenger vehicles such as light trucks, sport-utility vehicles and vans. Headquartered in Marshall, Michigan, it employs 1,050 people. The unit has operations in North America and Europe, and an expanding presence in South America and Asia. Major customers include Ford, General Motors/Isuzu and DaimlerChrysler.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The company has 12,000 employees and operates 54 manufacturing and technical facilities in 13 countries. Customers include Ford, DaimlerChrysler, General Motors, Toyota, Caterpillar, Navistar, PSA and VW Group. The Internet address for Borg-Warner Automotive is: http://www.bwauto.com/
Eaton Corporation is a global manufacturer of highly engineered products that serve industrial, vehicle, construction, commercial, aerospace and semiconductor markets. Principal products include hydraulic products and fluid connectors, electrical power distribution and control equipment, truck drivetrain systems, ion implanters and a wide variety of controls. Headquartered in Cleveland, the company has 64,500 employees and 215 manufacturing sites in 25 countries around the world. Sales for 1998 were $6.6 billion. On April 9, 1999 Eaton acquired Aeroquip-Vickers, Inc., which had sales of $2.1 billion in 1998. The Internet address for Eaton is: http://www.eaton.com/
Statements contained in this news release may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management's current expectations, estimates and projections. Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Such risks and uncertainties include: fluctuations in domestic or foreign automotive production, the continued use of outside suppliers by original equipment manufacturers, fluctuations in demand for vehicles containing Borg-Warner's products, general economic conditions, as well as other risks detailed in Borg-Warner's filings with the Securities and Exchange Commission, including the Cautionary Statements filed as Exhibit 99.1 to the Form 10-K for the fiscal year ended December 31, 1998.