By Sam Atkins
Published in News on September 23, 2004 2:00 PM
Cooper Tire & Rubber Co. announced that it has signed a $1.17 billion agreement to sell its automotive business, Cooper-Standard Automotive, to an entity formed by The Cypress Group and Goldman Sachs Capital Partners.
There are two Cooper-Standard Automotive plants in Wayne County: a 167,000-square-foot plant on Fedelon Trail and a 207,000-square-foot plant on Woodland Church Road. Cooper-Standard Automotive is based in Novi, Mich., and had revenue of about $1.66 billion in 2003.
Roger S. Hendriksen at the company's corporate headquarters in Findlay, Ohio, said the buyer will make all decisions regarding what to do with the business and what will happen to all of its plants and employees.
Lazard Freres, an investment banking firm based in New York, had been contacting potential buyers since around March, and Cooper Tire signed the agreement last week. The sale is expected to be final in the fourth quarter and is subject to the purchaser's receipt of financing from committed sources and other customary conditions, including the receipt of regulatory approvals, according to a Cooper Tire press release.
Hendriksen said employees of all Cooper-Standard plants have been informed of the agreement. A representative from the Goldsboro plant confirmed that the plant received a corporate letter, and copies were given out to all of its employees. There was also an international conference call at the plant on Friday morning, which was open to all employees, he said.
The Cooper-Standard plant on Fedelon Trail was established in 1984 as a Standard Products plant, and in 1999, Cooper Tire and Rubber Co. combined with it to form Cooper-Standard Automotive.
It manufactures rubber seals for car doors and windows and ships the seals to Ford plants in Norfolk, Va.; Kansas City, Mo., and Dearborn, Mich. Combined it supplies seals for all the Ford F-150 pickup trucks manufactured, or about 800,000 vehicles a year.
It was named Wayne County's "Industry of the Year" in 2003 and has grown to employ over 800 full-time employees.
Around 270 employees were hired in a five-month period last year after it invested over $5 million to upgrade equipment. It gained two new contracts last year, the 2004 Ford F-150 pickup truck and the 2004 Chevrolet Colorado pickup.
The plant on Fedelon Trail conducts all of the extrusion, or primary, processes for the company and some secondary operations. The Woodland Church Road plant, which was established in 1997, has secondary operations only.
"We are pleased with the transaction terms reached with Cypress and Goldman," said Thomas A. Dattilo, chairman, president, and chief executive officer of Cooper Tire & Rubber Co.
"We look forward to pursuing growth opportunities in our tire business. We believe that after the transaction is completed, Cooper-Standard Automotive will be well-positioned for continued strong growth under its new ownership."
Dattilo said that proceeds from the sale will be used for debt reduction, investment in Cooper's tire operations, to repurchase shares or a combination of these.
The Cypress Group is a New York-based private equity group that manages two private equity funds with more than $3.5 billion in commitments. Cypress invests in privately negotiated transactions, targeting operating businesses and investing with management to foster continued growth, the release states.
Goldman Sachs is a global leader in corporate equity and mezzanine investing. To date, it has formed 10 investment vehicles aggregating over $17 billion of capital.
GS Capital Partners 2000 is the current primary investment vehicle for Goldman Sachs to make privately negotiated equity investments. It seeks long-term capital appreciation by committing equity to high-quality companies with superior management in a variety of situations, including leveraged buyouts, recapitalizations, and growth investments to fund acquisition or expansion, according to the release.
The fund invests across a broad range of industries and creates value through meaningful involvement with portfolio companies' strategic decision-making and operating philosophy, the release states.
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