Less than a month after WL Ross & Co. helped launch International Auto Components Group (IAC), a joint venture with Franklin Mutual Advisors and Lear Corp., IAC has inked its first deal, buying most of Collins & Aikman’s European assets.
Leading up to the acquisition, WL Ross had been an avid buyer of Collins & Aikman debt. The company declared bankruptcy this past summer, just days after David Stockman resigned as the chairman and CEO. Collins & Aikman had been a portfolio company of Heartland Industrial Partners, the Greenwich, Connecticut private-equity firm Stockman had co-founded.
When WL Ross & Co. head Wilbur Ross spoke to PEO in September, he outlined a plan for the auto-parts space that would appear similar to his other initiatives in the steel and textile industries.
The difficulties encountered by Collins & Aikman could be considered typical for an auto parts company. Higher commodity and energy costs, coupled with pricing pressure from the OEMs have undercut many in the space, and Ross feels consolidation could be the answer.
“We believe the sector really just needs to consolidate,” Ross said at the time. “There is a large number of auto-parts companies selling to a relatively small number of auto makers. There’s always going to be someone making the same product and doing it for 25 cents cheaper.”
Ross’s first move in the space was the September purchase of a 25-percent stake in Oxford Automotive Aps, through $1.1 billion WLR Recovery Fund III.
Collins & Aikman, meanwhile, is a supplier to Ford, General Motors, DaimlerChrysler, Porsche, Saab, Volvo and other OEMs, and employs roughly 2,300 workers.
The deal is expected to close in January of next year.