Au­to­liv has $1 bil­lion to spend in Ja­pan, safety ac­qui­si­tions, CEO says

The Pak Banker - - Company& -

STOCK­HOLM: Au­to­liv Inc., the world's largest maker of au­to­mo­tive air bags and seat­belts, has about $1 bil­lion to spend in Ja­pan and fast­grow­ing seg­ments such as elec­tronic ac­ci­dent pre­ven­tion, Chief Ex­ec­u­tive Of­fi­cer Jan Carl­son said, Bloomberg said.

"We're bet­ter equipped to do ac­qui­si­tions, and we are look­ing to do more of them ahead," Carl­son said in an in­ter­view yes­ter­day at the com­pany's Stock­holm head­quar­ters. "We have the strong­est bal­ance sheet we've ever had."

Au­to­liv is in­ter­ested in buy­ing com­pa­nies in Ja­pan, where its 20 per­cent mar­ket share in the coun­try is lower than else­where, Carl­son said. Au­to­liv has a 35 per­cent share glob­ally, in­clud­ing about 40 per­cent in Europe and North Amer­ica. The com­pany is hold­ing "loose dis­cus­sions" with po­ten­tial sell­ers, Carl­son said, with­out iden­ti­fy­ing can­di­dates.

Global car pro­duc­tion has re­bounded from the re­ces­sion, spurring sales of seat­belts and airbags. About 70.3 mil­lion cars will be built in 2010, up from 57.4 mil­lion last year, IHS Au­to­mo­tive fore­casts. Pro­duc­tion may sur­pass 91 mil­lion in 2015, the in­dus­try an­a­lyst pre­dicts.

Out­side Ja­pan, Au­to­liv is mainly pur­su­ing ac­qui­si­tions of com­pa­nies mak­ing "ac­tivesafety" prod­ucts, which in­clude radar and other elec­tronic equip­ment that help pre­vent ac­ci­dents, Carl­son, 50, said. While this seg­ment's vol­ume is many times smaller than the mar­ket for seat­belts and airbags, its growth pace will be "much faster," he said, adding Au­to­liv this year will sell al­most $100 mil­lion worth of ac­tive-se­cu­rity prod­ucts.

"We would like to do an ac­qui­si­tion in ac­tive safety, but the dif­fi­culty is there aren't many sell­ers," he said. "They prob­a­bly see the same growth po­ten­tial in this area as we do."

Au­to­liv has the ca­pac­ity to spend about $1 bil­lion on ac­qui­si­tions by us­ing ex­ist­ing cash and bor­row­ing funds while still not "bur­den­ing the debt grade too much," Carls­son said. Its net debt at the end of Septem­ber was $338 mil­lion, down from $878 mil­lion a year ear­lier.

Au­to­liv ex­pects fourthquar­ter rev­enue to grow 15 per­cent and the op­er­at­ing mar­gin to hit 12 per­cent, Carl­son said in the in­ter­view, main­tain­ing an ear­lier fore­cast.

Brazil rep­re­sents one of Au­to­liv's biggest growth op­por­tu­ni­ties, Carl­son said, not­ing that from 2014 all cars sold in the coun­try must be equipped with front airbags. Au­to­liv, whose Brazil­ian mar­ket share is be­tween 40 and 45 per­cent, said last month it's started con­struc­tion of an airbag in­fla­tor fac­tory near Sao Paulo.

In China the com­pany has in­vested be­tween $90 mil­lion and $100 mil­lion in ex­pand­ing and up­grad­ing some of its 11 lo­cal fac­to­ries. Au­to­liv aims to boost its share of the Chi­nese mar­ket to 35 per­cent by 2012 from to­day's 30 per­cent, Carl­son said.

In a sep­a­rate news item, it is re­ported by Bloomberg that Ad­van­test Corp., the world's biggest maker of ma­chines used to test me­mory chips, bid $729 mil­lion for Verigy Ltd. to ex­pand its prod­uct line-up, in a deal that would be the Ja­panese com­pany's biggest in more than a decade.

Ad­van­test of­fered $12.15 a share, a 33 per­cent pre­mium over the clos­ing price on Dec. 3, for the com­pany's 60 mil­lion out­stand­ing shares, ac­cord­ing to a state­ment from Verigy. Verigy re­jected the un­so­licited of­fer and was open to con­tin­ued talks, the Singapore-based com­pany said.

The pro­posal pits Ad­van­test against LTXCre­dence Corp. in a bid­ding war for a com­pany that makes test­ing gear for logic de­vices and the flash me­mory chips that store songs and pho­tos in prod­ucts such as Ap­ple Inc.'s iPhone. -Bloomberg

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