BorgWarner Inc. (NYSE:BWA) To Buy Hybrid Motor Maker Remy International, Inc. (NASDAQ:REMY) For $950 Million


Dallas, Texas 07/14/2015 (Financialstrend) – BorgWarner Inc. (NYSE:BWA) the auto parts maker has announced it proposed purchase of Remy International, Inc. (NASDAQ:REMY), a hybrid motor maker for $950 million on Monday. The deal between the two companies is viewed as a partnership which will bring in further consolidation within the auto parts manufacturing industry.

BorgWarner Inc, which is engaged in the making of transmission parts as well as turbochargers, will offer $29.50 per share. The offer is considered as 44% premium on the share prices of Remy International as of its Friday’s prices. In its statement the company considered the price as indicative of its enterprise value of roughly $1.2 billion.

As with most other industries the auto manufacturing industry is the midst of a consolidation upheaval. The reasons for smaller auto components manufacturers to consolidate are the demand for fuel-efficient vehicles, industry safety regulations and the need to scale products for cost effectiveness. Another latest such consolidation was in the month of May, earlier this year. The German auto supplier ZF Friedrichshafen AG purchased TRW Automotive Holdings Corp for $12.4 billion.

CEO of BorgWarner Inc. (NYSE:BWA), James Verrier during a conference call remarked that the ‘prime path’ for the company was organic growth. This was being strengthened by key technology acquisition by way of merger and acquisition strategies, he added.

Remy International was built by two brothers Frank and Perry Remy, who developed various components working on magnets. Thus several generators, magnetos based on magnets were made for early automobiles.  It was eventually acquired by General Motors in 1918, and once again restructured in 1995 as an independent company. By 2004 it had become Remy International with brief bankruptcy in 2007. BorgWarner Inc. (NYSE:BWA) acquisition of Remy International is another major step to consolidation within the auto industry.

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