IAC, Shenda JV for soft trim, acous­tics prod­ucts

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In­ter­na­tional Au­to­mo­tive Com­po­nents (IAC) and Shang­hai Shenda Co. Ltd. (Shenda) have signed a de­fin­i­tive agree­ment to form a global joint ven­ture (JV) part­ner­ship to sup­ply soft trim and acous­tics prod­ucts to au­to­mo­tive orig­i­nal equip­ment man­u­fac­tur­ers (OEM).

The UK-af­fil­i­ate of Shenda will ac­quire 70% stake in the UK-based JV based at an en­ter­prise value of (US) $570 mil­lion. IAC will main­tain a 30% in­ter­est. The JV, which will be named at a later date, ex­pands an ex­ist­ing, suc­cess­ful JV part­ner­ship be­tween af­fil­i­ates of IAC and Shenda span­ning nearly two decades. The agree­ment is sub­ject to var­i­ous con­di­tions, in­clud­ing third-party con­sents and other con­di­tions cus­tom­ary for trans­ac­tions of this type. In con­nec­tion with the trans­ac­tion, IAC and its af­fil­i­ates will en­ter into var­i­ous an­cil­lary agree­ments pro­vid­ing IAC with cus­tom­ary mi­nor­ity share­holder rights with re­spect to its eq­uity in­ter­est in the new JV.

Sim­i­lar to IAC and Shenda’s ex­ist­ing JV, the new JV’s man­age­ment team will com­prise ex­pe­ri­enced lead­ers from IAC. Its op­er­a­tions will in­clude sub­stan­tially all of IAC’s soft trim and acous­tics op­er­a­tions, con­sist­ing of 21 man­u­fac­tur­ing fa­cil­i­ties and 4 tech­ni­cal cen­ters world­wide. The JV is ex­pected to gen­er­ate more than $1 bil­lion in an­nual sales from floor car­pets, acous­tic in­su­la­tors, pack­age trays, trunk trim and util­ity floor­ing prod­ucts.

“This new JV will tran­si­tion Shenda from a re­gional Chi­nese soft trim and acous­tics prod­ucts man­u­fac­turer to a global sup­plier to the au­to­mo­tive in­dus­try,” Yao Ming Hua, Chair­man of Shang­hai Shenda Co. Ltd, said. “It will pro­vide ac­cess to Euro­pean and North Amer­i­can mar­kets, com­ple­ment­ing our cur­rent strong foot­print in China.”

As a key ac­tion in IAC’s longterm busi­ness strat­egy, called 2020 Vi­sion, the pro­ceeds from the for­ma­tion of the JV will al­low IAC to con­tinue in­vest­ing glob­ally in its core Cock­pit & Over­head Sys­tems busi­ness. “The re­sult­ing in­vest­ment will make IAC a stronger global Tier One sup­plier in the in­te­ri­ors space,” IAC Pres­i­dent and CEO Robert (“Steve”) Miller, said. “It also demon­strates that IAC’s prin­ci­pal owners, funds man­aged by WL Ross & Co. LLC and Franklin Mu­tual Ad­vis­ers LLC,re­main fully com­mit­ted to the fu­ture of IAC.”

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