Kuhlman acquisition charges Borg-Warner turbo business

CHICAGO — Auto-parts maker Borg-Warner Automotive will acquire Kuhlman Corp., which produces Schwitzer turbochargers among other vehicle components, for $39 US a share in a cash and stock. The deal is valued at about $660 million, including the assumption of debt.

Kuhlman’s Schwitzer Group, maker of proprietary engine components including turbochargers and fuel tanks, represents about $460 million, or 60%, of the company’s anticipated 1998 revenue of $765 million. The Savannah, Ga.-based company’s electrical transformer and wire and cable businesses are expected to be sold.

Chicago-based Borg-Warner said it expects its engine components and systems businesses to increase from 15% to about half of its revenues with the acquisition.

“Their Schwitzer turbocharger unit in the U.S., combined with our turbocharger business in Europe, will make us a global leader with sufficient scale to capitalize on growing worldwide demand,” John Fiedler, chairman and chief executive officer of Borg-Warner, said in a statement.

“The acquisition continues to position us to take advantage of the growth of direct-injected diesel engines worldwide and provides immediate new growth opportunities in air and fluid components for commercial vehicles,” he said.

Borg-Warner, with 1997 sales of about $1.8 billion, operates 36 manufacturing plants in 12 countries. The company lists DaimlerChrysler AG, Ford Motor Co., Navistar International, British Aerospace/Rover, Harley-Davidson, Cummins Engine Co., and Mercury Marine among its original-equipment customers.

The deal is subject to approval by Kuhlman shareholders and customary regulatory review. Borg-Warner said it expects the transaction to close in the first quarter of 1999.