Standard Motor Products, Inc., an automotive replacement parts manufacturer and distributor, announced that it has signed a definitive agreement to acquire the assets of Dana Corporation’s Engine Management Division.
The company reports that the acquisition is for approximately $120 million U.S., subject to post closing adjustment. In 2002, sales of Dana’s Engine Management Division were slightly below $300 million U.S. The acquisition is expected to close in the second quarter of 2003.
Lawrence Sills, Standard Motor Products, chairman and chief executive officer, said, “We view the acquisition as a major step forward for our company. We expect the acquisition to essentially double our Engine Management sales. Dana’s Engine Management Division has comparable product lines and channels of distribution to ours. Each of us has excess capacity.
“Once the transition period is complete, which we anticipate may take up to 18 months, we believe there will be substantial cost savings.”
“Dana’s division has a long and valued history, with some of the best brand names and most prestigious customers in the industry. We will be maintaining the brand names and look forward to working with the customers in the months and years ahead.”
The consideration to Dana will consist of cash, a seller note, and SMP common stock. SMP plans to finance the cash portion of the purchase price, as well as the one time costs associated with the acquisition and integration expenses, with an expansion of its existing credit facility with GE Commercial Finance and from the proceeds of a public equity offering of SMP common stock.
James Burke, Standard Motor Products, chief financial officer, said, “We have worked with GE Commercial Finance and our other bank group members to increase the size of our credit facility and to extend the term of the facility until February 2008.
“Moreover, as this transaction represents a large and strategically important step for our company, our board has decided to issue additional equity to the public. Finally, we are pleased that Dana has indicated its confidence in the transaction and in our Company by making a meaningful equity investment.”
Standard Motor Products, Inc. plans to file a registration statement for the issuance of common shares later this week. Standard Motor Products contemplates closing the equity offering and the acquisition during the second quarter of 2003. The acquisition is subject to regulatory approval, as well as other customary closing conditions, including the successful completion of the public equity offering.