SOUTHFIELD, Mich., Aug. 27, 2014 /PRNewswire/ -- Lear Corporation
(NYSE: LEA), a leading global supplier of automotive seating and
electrical distribution systems, today announced that it has signed
a definitive agreement to acquire Eagle Ottawa.
Eagle Ottawa is the world's
largest supplier of automotive leather with a rich 150-year history
and stable private ownership for nearly 50 years. The company
has an experienced management team, modern facilities, a low-cost
footprint, diversified customers and a reputation for superior
quality, product innovation and craftsmanship. Eagle Ottawa
will complement Lear's leading position in luxury and performance
automotive seating. The transaction is valued at $850 million on a cash and debt free basis.
Lear intends to fund the transaction through a combination of cash
on hand and debt. The closing of the transaction is expected
to occur in the first quarter of 2015 subject to customary
conditions, including regulatory approvals. Lear expects the
transaction to be approximately 5% accretive to annual earnings per
share upon closing.
"The acquisition of Eagle Ottawa is another important step in
strengthening our core seating business, expanding our component
capabilities and accelerating profitable sales growth," said
Matt Simoncini, Lear's President and
CEO. "This transaction will further enhance Lear's position as a
global leader in automotive seating and will create significant
value for our shareholders. Eagle Ottawa adds global leather
design and development resources as well as technical expertise to
our existing surface materials capabilities. Eagle Ottawa
will also enhance the level of craftsmanship and design options
that we are able to provide to our customers and increase
opportunities for sales growth and diversification."
Eagle Ottawa is the largest
global supplier of automotive leather, with annual sales of
approximately $1 billion. Eagle
Ottawa has a balanced geographic customer mix, with an industry
leading position in North America
and Asia and also a top supplier
position in Europe. Eagle Ottawa has strong relationships
with virtually all of the major global automakers, including BMW,
Daimler, Fiat Chrysler, Ford, General Motors, Honda, Hyundai,
Jaguar Land Rover, Mazda, Renault/Nissan and Toyota.
The acquisition of Eagle Ottawa fits Lear's previously stated
acquisition strategy and financial targets:
Strategic Fit
- Strengthens Lear's Seating business with increased component
capabilities
- Complements Lear's existing seat fabric and cut-and-sew
operations
- Provides Lear with additional premium leather capabilities
- Enhances craftsmanship and Lear's ability to offer a high level
of customization
- Provides opportunity for incremental sales growth
- Further diversifies Lear's customer mix
- Consistent with Lear's capital allocation strategy to invest
for profitable growth, maintain a strong and flexible balance sheet
and return cash to shareholders
Supports Lear's Financial Targets
- Acquisition made at a fair market valuation and expected to be
immediately accretive
- Consistent with Lear's stated gross leverage target of 1.5x
EBITDA
- Lear intends to continue to return cash to shareholders; at the
end of the second quarter, Lear had approximately $600 million in remaining share repurchase
authorization
The transaction is expected to deliver sales and operating
synergies. By combining design, product development and
manufacturing capabilities in leather, fabric and our cut-and-sew
operations, we will be able to provide improved quality and
craftsmanship, while reducing cost for our customers.
Citigroup Global Markets, Inc. and Guggenheim Securities are
serving as Lear's financial advisors, and Winston & Strawn is
serving as its legal counsel.
Conference Call and Webcast
Lear will host a conference call to review the transaction on
August 28, 2014 at 9:00a.m. EDT. The conference call can be
accessed by dialing 1-800-789-4751 (domestic) or 1-973-200-3975
(international). The investor presentation to be reviewed on
the conference call is available on Lear's website on the Investor
Relations page http://ir.lear.com/. You may also listen to
the live audio webcast of the call, in listen-only mode, on the
corporate website at http://ir.lear.com. The audio replay
will be available two hours following the call at 1-855-859-2056
(domestic) or 1-404-537-3406 (international) and will be available
until September 12, 2014, with a
Conference I.D. of 89728966.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding anticipated financial results
and liquidity. The words "will," "may," "designed to,"
"outlook," "believes," "should," "anticipates," "plans," "expects,"
"intends," "estimates," "forecasts" and similar expressions
identify certain of these forward-looking statements. The Company
also may provide forward-looking statements in oral statements or
other written materials released to the public. All such
forward-looking statements contained or incorporated in this press
release or in any other public statements which address operating
performance, events or developments that the Company expects or
anticipates may occur in the future, including, without limitation,
statements related to business opportunities, awarded sales
contracts, sales backlog and ongoing commercial arrangements, or
statements expressing views about future operating results, are
forward-looking statements. Actual results may differ materially
from any or all forward-looking statements made by the
Company. Important factors, risks and uncertainties that may
cause actual results to differ materially from anticipated results
include, but are not limited to, general economic conditions in the
markets in which the Company operates, including changes in
interest rates or currency exchange rates; the financial condition
and restructuring actions of the Company's customers and suppliers;
changes in actual industry vehicle production levels from the
Company's current estimates; fluctuations in the production of
vehicles or the loss of business with respect to, or the lack of
commercial success of, a vehicle model for which the Company is a
significant supplier; disruptions in the relationships with the
Company's suppliers; labor disputes involving the Company or
its significant customers or suppliers or that otherwise affect the
Company; the outcome of customer negotiations and the impact of
customer-imposed price reductions; the impact and timing of program
launch costs and the Company's management of new program launches;
the costs, timing and success of restructuring actions; increases
in the Company's warranty, product liability or recall costs; risks
associated with conducting business in foreign countries; the
impact of regulations on the Company's foreign operations; the
operational and financial success of the Company's joint ventures;
competitive conditions impacting the Company and its key customers
and suppliers; disruptions to the Company's information technology
systems, including those related to cybersecurity; the cost and
availability of raw materials, energy, commodities and product
components and the Company's ability to mitigate such costs; the
outcome of legal or regulatory proceedings to which the Company is
or may become a party; the impact of pending legislation and
regulations or changes in existing federal, state, local or foreign
laws or regulations; unanticipated changes in cash flow, including
the Company's ability to align its vendor payment terms with those
of its customers; limitations imposed by the Company's existing
indebtedness and the Company's ability to access capital markets on
commercially reasonable terms; impairment charges initiated by
adverse industry or market developments; the Company's ability to
execute its strategic objectives; changes in discount rates and the
actual return on pension assets; costs associated with compliance
with environmental laws and regulations; the impact of new
regulations related to conflict minerals; developments or
assertions by or against the Company relating to intellectual
property rights; the Company's ability to utilize its net operating
loss, capital loss and tax credit carryforwards; global sovereign
fiscal matters and creditworthiness, including potential defaults
and the related impacts on economic activity, including the
possible effects on credit markets, currency values, monetary
unions, international treaties and fiscal policies; and other risks
described in the Company's Annual Report on Form 10-K for the year
ended December 31, 2013, and its
other Securities and Exchange Commission filings. Future
operating results will be based on various factors, including
actual industry production volumes, commodity prices and the
Company's success in implementing its operating strategy.
Information in this press release relies on assumptions in the
Company's sales backlog. The Company's sales backlog reflects
anticipated net sales from formally awarded new programs less lost
and discontinued programs. The calculation of the sales
backlog does not reflect customer price reductions on existing or
newly awarded programs. The sales backlog may be impacted by
various assumptions embedded in the calculation, including
vehicle production levels on new programs, foreign exchange rates
and the timing of major program launches.
The forward-looking statements in this press release are made as
of the date hereof, and the Company does not assume any obligation
to update, amend or clarify them to reflect events, new information
or circumstances occurring after the date hereof.
About Lear Corporation
Lear Corporation is one of the world's leading suppliers of
automotive seating and electrical distribution systems. The
Company's world-class products are designed, engineered and
manufactured by a diverse team of approximately 122,000 employees
located in 36 countries. Lear's headquarters are in Southfield, Michigan, and Lear is traded on
the New York Stock Exchange under the symbol [LEA]. Further
information about Lear is available on the Internet at
www.lear.com.
About Eagle Ottawa
Eagle Ottawa produces premium
automotive leather products to automakers for the automotive
industry. Eagle Ottawa employs approximately 6,500 people and
has 19 facilities in 12 countries. Eagle Ottawa's
headquarters are in Auburn Hills,
Michigan. Further information about Eagle Ottawa is
available on the Internet at www.eagleottawa.com.
SOURCE Lear Corporation