Germany's Continental To Buy Veyance Technologies From Carlyle For $1.9 Bln

(RTTNews) - German automotive supplier Continental AG (CTTAY) agreed Monday to acquire Veyance Technologies, Inc. from its owner global private equity firm Carlyle Group LP (CG) for 1.4 billion euros or $1.9 billion. The deal, which is subject to merger control clearance and approval of the responsible anti-trust authorities, is expected to close later this year.

"Veyance's business and geographic presence complements Continental's existing global footprint, and the planned integration of Veyance into our ContiTech division will expand our position in rubber and plastics technologies on a worldwide basis. Furthermore this acquisition will enable Continental to come a step closer to its strategic goal of increasing further our proportion of sales to industrial customers and private end users," said Dr. Elmar Degenhart, Chairman of Continental's Executive Board.

Carlyle Group acquired substantially all of the engineered products division that was spun-off by Goodyear Tire & Rubber Co. (GT) in August 2007 in a deal valued at $1.475 billion and renamed it Veyance Technologies.

The deal will assist Hanover, Germany-based Continental in its process of strengthening its industrial business, while also opening up of new markets and improve its global reach.

Veyance Technologies achieves about half of its sales in the US. Other important markets are Latin America, Africa, China and further Asian countries. The company focuses on conveyor belts, hoses, power transmission belts and air springs.

The deal will particularly benefit ContiTech's conveyor belt and fluid technology business units from an enhanced global presence. The power transmission and air spring systems units will also achieve positive results from the merger.

Fairlawn, Ohio-based Veyance operates globally in the field of rubber and plastics technology and recorded sales of about $2 billion or 1.5 billion euros in 2013, around 90 percent of which were achieved outside the automotive industry.

Veyance produces and supplies, inter alia, conveyor belts, industrial hoses, air spring systems and power transmission belts.

Upon closure of the deal, Continental intends to integrate the acquired business into its ContiTech division. ContiTech sees sales around 5.4 billion euros in future, and will achieve about 60 percent of the sales outside the automotive OE sector in future.

"Veyance Technologies will complement our ContiTech division in key markets where our presence is limited, particularly in the US and South America. Plants in Mexico, Canada, China, Australia and also South Africa will provide additional opportunities," noted Heinz-Gerhard Wente, Member of the Executive Board of Continental and CEO of the ContiTech division.

On Frankfurt's Xetra, Continental shares closed Monday's trading at 159.15 euros, up 1.00 euros or 0.63%. Meanwhile, CG closed on the Nasdaq at $34.88, up $0.26 or 0.75% on a volume of 0.27 million shares.