Linamar Corp. said Thursday it agreed to make an offer of EUR771 million ($882 million) for French auto-parts maker Montupet SA as part of its effort to become a global leader in the integrated casting and machining of aluminum components for the auto sector.
Canada-based Linamar, which makes precision metallic components for vehicles as well as other industrial products, said its offer of EUR71.53 a share in cash is a 15.5% premium to Montupet’s closing stock price Wednesday. It said it is also offering to assume the French company’s net debt of about EUR 65 million.
Auto suppliers have been moving to either broaden their product portfolios or focus their spending as car companies expand their manufacturing operations in markets such as China, Mexico and Brazil.
“Montupet is a technical leader in the market, well-known and respected for its engineering and processing expertise in the cylinder head segment in particular where we intend to grow and leverage our respective strengths,” Linamar Chief Executive Linda Hasenfratz said in a statement.
Linamar has financing commitments in place for up to 100% of the cash purchase price and said the deal will boost its earnings. Last year, Linamar posted a profit of about 321 million Canadian dollars ($248 million) on sales of C$4.2 billion.
Montupet has agreed to support Linamar’s planned tender offer and not solicit other bids. The French company’s senior managers and anchor shareholders, who together own about 36.6% of Montupet’s shares outstanding, have agreed to tender their shares to Linamar’s offer, Linamar said. Montupet’s top executives and anchor shareholders have agreed to remain with Linamar for at least one year after the acquisition closes, it added.
The tender offer is expected to be open to the public in early December 2015.