Delphi Acquires Lucas Diesel Systems; Launches Delphi Diesel Systems
11 January 2000
Delphi Acquires Lucas Diesel Systems; Launches Delphi Diesel Systems
FLINT, Mich., Jan. 10 -- Delphi Automotive Systems
Corporation announced today that it has completed the acquisition
of substantially all of the assets of Lucas Diesel Systems and its related
aftermarket activities from TRW Inc. The transaction, valued at approximately
538 million pounds or U.S. $871 million (includes 25 million pounds payable
subject to completion of acquisition of certain joint venture interests) is
subject to certain post-closing adjustments.
This operation, which has been renamed Delphi Diesel Systems, will report
through Delphi Energy & Chassis Systems division.
Dominique Chauvin, who previously was managing director of Lucas Diesel
Systems, has been named managing director of Delphi Diesel Systems, reporting
to Guy C. Hachey, president of Delphi Energy & Chassis Systems.
According to J. T. Battenberg III, chairman, CEO and president of Delphi
Automotive Systems: "This is a powerful acquisition -- both tactically in the
short term, and strategically in the long term. It's accretive to Delphi
earnings in the first year, produces new key technology, provides strategic
geographic expansion and will boost our sales growth worldwide. Delphi Diesel
Systems is a global provider of diesel systems with 12 manufacturing
facilities in seven countries, and 8,600 employees."
"We are excited and delighted to add this business to our product
portfolio," Battenberg said. "With the continued increase of diesel
penetration around the world, especially in Europe, we see tremendous growth
opportunities. Delphi Diesel Systems has a strong position in diesel
injection systems and has an exciting new common rail system which will be the
product of choice for the next generation of diesel engines. In short, we
believe this is the right move at the right time."
Delphi Diesel Systems is now the world's No. 2 producer of diesel fuel-
injection systems for light-, medium- and heavy-duty vehicles with annual
revenues of approximately U.S. $1.1 billion. Delphi Diesel Systems will
support Delphi in its quest to be recognized by customers as their best
supplier -- and, in turn, build shareholder value.
According to Battenberg, the completion of this acquisition clearly meets
Delphi's strategic and financial objectives: "Delphi is now uniquely
positioned to offer customers complete gas and diesel engine management
systems, including fuel handling, air control, emissions aftertreatment,
sensors and actuators, and sophisticated electronic control."
Additionally, the acquisition supports many of Delphi's key initiatives,
including:
* Positioning Delphi as a leader in its product lines.
* Increasing Delphi non-GM revenue by an estimated 16 percent to about
U.S. $8 billion on an annualized basis.
* Boosting Delphi's European sales by more than 20 percent to a total of
more than U.S. $5 billion.
* Enhancing Delphi's system and product capabilities and complementing
Delphi's gasoline engine management systems capabilities.
* Strengthening Delphi's technology focus by adding entirely new high-
growth diesel product lines -- common rail and electronic unit
injection (EUI).
According to Hachey, Delphi Diesel Systems has a strong managerial team,
led by Chauvin, who has more than 30 years of experience in the automotive
industry. With the launch of Delphi Diesel Systems, Hachey points out that
Delphi Diesel Systems brings more than 850 top technical people to Delphi,
which prides itself on being a technology leader.
"During our due diligence, the Delphi team was impressed with the caliber
of the managerial team, the top technical talent and the tremendous work ethic
of the workforce," Hachey said.
Charles W. Ondrick has been named director of the Delphi Diesel Systems
integration. Ondrick, who reports to Chauvin and Hachey, leads a multi-
functional team that will integrate the two organization's business cultures,
processes and systems.
According to Donald L. Runkle, president of the Dynamics & Propulsion
sector, which Delphi Diesel Systems joins in the Delphi organization, this
acquisition strengthens Delphi's competitiveness. "We anticipate synergies in
engineering, manufacturing and general administrative activities that will
further add value to our global customers," Runkle said. "And, as we grow
together as one organization, I am confident that we will continue to realize
efficiencies between the two organizations and will increase the innovative
products flowing to our customers."
While global in scope, Delphi Diesel Systems significantly enhances
Delphi's penetration in Europe, which today accounts for approximately 25
percent of the market, said Jose Maria Alapont, president of Delphi Europe.
In fact, customer reaction to the transaction has been very positive. For
example, Herve Guyot, president of Sogedac, the purchasing organization for
PSA Peugeot Citroen, said: "We consider this acquisition by Delphi to be very
favorable for its long-term continuity and its ability to participate in
future high technology programs." Lucas Diesel has been a major supplier of
diesel systems to PSA Peugeot Citroen.
"Delphi Diesel Systems has an excellent customer base with key leaders in
diesel engines in Europe, further diversifying Delphi's customer base and
regional presence," Alapont said. "Delphi now has the ability to provide a
full line of gasoline and diesel engine management and aftertreatment systems
that we expect will improve access to both new and existing customers."
"Diesel systems," Chauvin added, "are at the 'heart' of the powertrain and
are a critical driver of vehicle performance, providing a significant
opportunity to deliver systems level benefits. Today's modern diesels are
clean, quiet, smooth and powerful ... thanks to engine management systems such
as those offered by Delphi Diesel Systems."
"With increased pressure on emissions and fuel economy, as well as further
technological enhancements for diesel engines, the European diesel market is
expected to grow as OEMs continue to demand this technology. Delphi Diesel
Systems plans to offer innovative solutions in anticipation of our customers'
needs," Chauvin said.
Delphi Diesel Systems is expected to increase our opportunities for Delphi
in areas directly and indirectly related to diesel technology. For instance,
it will bolster Delphi's already substantial aftermarket business with the
addition of 4,000 aftermarket outlets.
Battenberg said: "An already strong team just got better today. The
members of the Delphi Diesel Systems team bring with them a strong track
record of product innovation. We welcome them to the Delphi team that is
squarely focused on achieving our vision of being recognized as our customer's
best supplier. We welcome Delphi Diesel Systems to Delphi and look forward to
sharing the best of both organizations."
Delphi Automotive Systems , with headquarters in Troy, Mich.,
USA, is a world leader in automotive component and systems technology.
Delphi's three business sectors -- Dynamics & Propulsion; Safety, Thermal &
Electrical Architecture; and Electronics & Mobile Communications -- provide
comprehensive product solutions to complex customer needs. Delphi has
approximately 210,000 employees and operates 180 wholly owned manufacturing
sites, 38 joint ventures, 60 customer centers and sales offices, and 30
technical centers in 38 countries. Regional headquarters are located in
Paris, Tokyo and Sao Paulo, Brazil.
For more information about this announcement and other important Delphi
news, visit Delphi's Web site at http://www.delphiauto.com
This press release, other than historical financial information, contains
forward-looking statements that involve a number of risks and uncertainties.
Important factors that could cause actual results to vary materially from
those anticipated in the forward-looking statements are set forth in Delphi's
Securities and Exchange filings, including without limitation, in Items 1 and
7 of Delphi's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, and Item 2 of Delphi's Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30, and Sept. 30, 1999.
Dominique Chauvin
Managing Director
Delphi Diesel Systems
Delphi Automotive Systems
Dominique Chauvin is managing director of Delphi Diesel Systems.
Dominique followed a commercial curriculum and graduated from HEC, the top
French business school. He started his professional career at AMP Inc., the
world producer of electronic connection and switching devices, initially in
France, then in Spain, Brazil, the UK and the United States.
After 26 years with AMP, he joined the Varity Group as head of the Massey
Ferguson division where he remained for a year until the firm was sold to the
AGCO group in 1994. Appointed as president of the International Division at
AGCO, he returned to Varity in September 1995. He took over the reins of
Kelsey-Hayes Braking Division in Livonia, Michigan. In September 1996, he
returned to France as managing director of the Diesel Systems Division
following the Lucas Varity merger.
From his years abroad, Dominique has learned the need to be open to world
changes, to respect different cultures and the importance of foreign language;
he speaks four languages in addition to French.