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