Valeo: Disposal of Stake in LuK for 1.21 Billion Euros

22 November 1999

Valeo: Disposal of Stake in LuK for 1.21 Billion Euros

    Valeo has just concluded an agreement aiming to dispose of its 50% stake in the German company LuK.
    The acquirer of Valeo's 50% stake in LuK is INA Holding-Schaeffler Group which holds the other 50% of its capital and controls the company. Valeo is divesting a major asset on which the return has been exclusively in the form of dividends.
    The transaction amounts to 1.21 billion euros (FFr 8 billion), that is a capital gain after tax of 641 million euros.
    Following this disposal, Valeo's net income in 1999 and net assets at the end 1999 will increase substantially. The Group's cash position will show a large surplus. Valeo's 1999 accounts will be published in January 2000.
    The Group is now initiating a drive for dynamic internal and external growth. To deploy these new financial resources beneficially, Valeo will exploit two levers: investment aimed at cost reduction and internal growth and the acquisition of profitable activities generating strong synergies.
    This strategy will have a positive net effect both on Group net income and return on capital employed in the short and long term.
    This agreement is subject to the authorization of the European competition authorities.
    Commenting on this transaction, Noel Goutard, Chairman & CEO of Valeo, said, "This historic agreement reached by LuK's shareholders is extremely beneficial to both parties. Valeo is exiting from a situation that had been blocked for a very long time and is also considerably strengthening its balance sheet and cash position. These new resources will be used to speed up further the Group's profitable growth as from the year 2000."
    Valeo is an independent industrial group fully focused on the design, manufacture and sale of components, systems and modules for cars and trucks. Present in the original equipment and aftermarket segments, Valeo is among the world's top 10 automotive suppliers with estimated 1999 sales of approximately 7.7 billion euros. The Group employs 50,400 persons worldwide and has 113 production facilities, 35 Research and Development centers and 10 distribution centers in 20 countries.