ThyssenKrupp Sells Budd Car-Parts Unit to Martinrea [Update-2]

Thom Rose | Oct. 16 (Bloomberg) -- ThyssenKrupp AG, Germany's largest steelmaker, sold its Budd car-parts unit to Martinrea International Inc. for $95 million as it reorganizes its North American automobile business.

ThyssenKrupp's automobile supply business, its third-largest unit, was the least profitable division in the last reported fiscal year. The company has sold assets worth more than 4.7 billion euros ($5.9 billion), including an aluminum castings unit in the U.S., and is closing a plant in Detroit to cut losses.

``This sale is positive news; Budd has been a big problem,'' said Alan Coats, a London-based analyst at HSBC Holdings Plc who has an ``underweight'' rating on ThyssenKrupp shares. ``ThyssenKrupp has been trying to sell this business for a long time.''

Martinrea, based in Ontario, will assume the unit's debt, giving a total transaction value of $275 million, Dusseldorf, Germany-based ThyssenKrupp said today in an e-mailed statement.

Martinrea gains ``additional technological strengths and locations that otherwise we would have had to build to be able to support the needs of the automotive industry,'' said Fred Jaekel, chief executive officer of Martinrea, in a separate statement. The acquisition will make Martinrea one of the four largest North American metal forming companies, he said.

The reason for the sale ``is the known need for restructuring in the body and chassis business, which is structurally and economically burdened, especially in North America,'' ThysennKrupp said in the statement. ThyssenKrupp will combine the automotive operations it still owns with its Technologies unit.

Viper Frame

The sale of the Troy, Michigan-based Budd unit, which makes the frame for DaimlerChrysler AG's Dodge Viper, is scheduled to be completed by the end of this year. The unit has about 1 billion euros in annual sales and employs about 3,500 people, ThyssenKrupp said.

After the sale, ThyssenKrupp's North American automobile business will have annual sales of about 2 billion euros and about 7,000 employees. The largest remaining operation will be the Waupaca foundry group, based in Wisconsin, with about 1 billion euros in annual sales.

For Martinrea, buying Budd is cheaper than building factories, the company said in its statement.

``I have always viewed ThyssenKrupp's North American body and chassis operation as a phenomenally well-equipped competitor,'' said Jaekel, Martinrea's leader.

ThyssenKrupp said it expects 2007 results to be similar to its previous year figures. The company reiterated that 2006 earnings before tax were about 2.5 billion euros for the fiscal year through Sept. 30.