Lear unloads N.A. interiors to Ross; C&A's and Delphi's next?

Finally agreeing to terms, Tier One automotive supplier Lear (Southfield, MI) has reached an agreement with financier Wilbur Ross to exit interiors, selling off a controlling stake of that segment of its North American business, after executing a similar deal with Ross in Europe. Under terms of the transaction announced Dec. 1, Lear will transfer the interior unit’s assets and $25 million in cash to new joint-venture partners WL Ross & Co. LLC and Franklin Mutual Advisers LLC. Lear retains a 25% equity interest in the business, which will be called International Automotive Components Group North America LLC (IAC). Lear estimates the North American unit has annual sales of approximately $2.5 billion.

In October, Lear sold a majority stake in its European interior business to Ross, who also purchased fellow Tier One interior supplier Collins & Aikman’s (C&A; Southfield, MI) European assets. That deal included 20 Lear plants and 12 C&A operations (MPW May 2006 First Look). Industry watchers speculate that IAC is targeting C&A’s North American business and could also be considering the interiors unit of Delphi (Troy, MI), which has expressed interest in winding down that segment.

On Nov. 14, C&A announced that it would sell its operations piecemeal or in their entirety, in the hopes of preserving the greatest number of jobs for its employees and paying off debts to creditors. The company entered Chapter 11 bankruptcy earlier this year, and filed its reorganization plan on Aug. 30. Part of that plan included a possible sale process, which C&A will now pursue after consulting creditors and in the face of production cuts by major North American automotive OEMs.

“Industry conditions have continued to deteriorate to a point that we have determined it was absolutely necessary for us to pursue a cooperative sale process,” C&A President and CEO Frank Macher said in a release. C&A also anticipates consolidating or closing plants in the near future.—[email protected]