Canadian autoparts maker Linamar to take over France's Montupet in $1.16B deal

TORONTO – One of Canada’s largest autoparts manufacturers — Linamar Corp. (TSX:LNR) — has a friendly agreement to take over a French company that makes sophisticated aluminum engine components.

Linamar says the acquisition of Montupet SA — in a cash deal that values the French company at C$1.16 billion — is part of the Ontario-based company’s goal of becoming a leading global supplier of aluminum components for the automotive sector.

Chief executive Linda Hasenfratz says Linamar sees significant growth potential for aluminum components because their relatively light weight helps improve vehicle fuel consumption and emissions.

“Aluminum content in light vehicles is expected to grow from about 350 pounds per vehicle today to close to 500 pounds per vehicle by 2025,” Hasenfratz said Thursday from Paris in a joint conference call with Montupet’s chairman and CEO.

“We’ll see an increase of about 30 per cent in the engine and about 20 per cent in the transmission and driveline areas,” Hasenfratz said. “Also a large increase in structural components, which will increase from about 43 pounds in the vehicle today to more than 100 pounds in the future.”

She said there’s very little overlap between the two companies’ operations and the acquisition of Montupet, which requires approvals, would provide “one-stop shopping” for vehicle makers that require aluminum cylinder heads — an important and technically sophisticated part of internal combustion engines.

Linamar is offering to buy all of Montupet’s stock but must receive at least 50 per cent to succeed under French law. The Montupet board of directors, along with shareholders who own 36.6 per cent of its stock, have agreed to tender to Linamar — or give it a chance to meet rival bids.

Linamar is offering 71.53 euros in cash for each Montupet share, or about C$107.30, which is 15.5 per cent above the pre-announcement market price for Manupet’s publicly traded shares. Linamar would also assume debt valued at 63 million euros or $94.5 million.

Montupet chairman and chief executive Stephane Magnan said a takeover by Linamar would be good for his company’s employees and shareholders.

“I think one of the weaknesses of Montupet is probably its size. But now this is compensated by the global size of the Linamar group and I think it’s a very good outcome for the future,” Magnan said.

Linamar, based in Guelph, Ont., has more than 19,500 employees worldwide at 48 manufacturing plants, five research centres and 15 sales offices in the Americas, Europe and Asia.

Montupet has eight manufacturing plants in Europe, Mexico and India as well as a tooling development operation in Spain. About one-quarter of its 3,500 employees are in France.

— Follow @DavidPaddon on Twitter.

Note to readers: David Paddon