Workers conduct a quality inspection of front door assemblies at Tower’s plant in Ghent, Belgium. Photo credit: TOWER
UPDATED: 12/7/18 2:28 pm ET – adds details
DETROIT — Longtime metal components supplier Tower International said it agreed to sell off its European division to a privately owned French automotive supplier in a deal valued at about $291 million.
The company, based near Detroit in Livonia, Mich., said in a Friday statement that the stock transaction with Financiere SNOP Dunois S.A., or FSD, is contingent on regulatory approval, but it’s expected to close during the first quarter of 2019.
“Our European operations has been a difficult place for us to grow based on the fragmentation of the market [and] the lack of scale for us over there,” spokesman Derek Fiebig said. “We’re mainly in the central part of Europe. With FSD, the European operations, the combined entity would have a pan-European reach.”
In a statement CEO Jim Gouin said the company is poised for growth.
“Since 2014, Tower’s North American business has grown by more than 40 percent in a relatively flat production environment as we have benefited from the industry’s shift from passenger cars to trucks and SUVs as well as OEM outsourcing,” Gouin said.
Tower is expected to book a $60 million loss from the transaction, due to currency translation, other adjustments and selling costs, according to a news release from November.
In Europe, which represents a third of the supplier’s revenue, Gouin said in July on a conference call for second-quarter earnings, sales dropped 0.2 percent for the third-quarter compared to last year. Total revenue grew 14 percent to $525 million for the quarter.
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