ROMULUS, Mich.-Two major wheel makers, Hayes Wheels International Inc. and Motor Wheel Corp., announced March 29 they intend to merge and form one of the largest international wheel and brake suppliers. The merger, if approved by shareholders and regulatory agencies, would involve a cash and stock transfer worth about $1.1 billion. The companies said they expect to finalize the transaction this summer.
Romulus-based Hayes Wheels will become the parent company and operate Motor Wheel, located 60 miles away in Okemos, Mich., as a subsidiary.
``I think its a good marriage when you look at the markets that both companies served,'' said Dennis Virag, an analyst with the Automotive Consulting Group in Ann Arbor, Mich.
Hayes Wheels is a major manufacturer of steel and aluminum passenger and light truck wheels. Motor Wheel produces wheels and brakes, primarily for heavy trucks.
The combined operation will be ``a major factor in the wheel market,'' Mr. Virag continued.
Hayes Wheels President and CEO Ranko Cucuz will become president and CEO of the combined company, while Motor Wheel President and CEO Richard W. Tuley will retain that post and become an executive vice president of the combined company.
Under terms of the agreement, Hayes Wheels' shareholders will receive a per-share payment of $28.80 cash and 0.1 share of common stock in the merged company.
Motor Wheel's majority shareholder, Joseph Littlejohn & Levy, will invest $200 million in the combined company, of which the New York-based investment firm will own 43 percent. Hayes Wheels' shareholders will retain a 16 percent interest.
Varity Corp., which currently holds 46.3 percent of Hayes Wheels, has agreed to sell its share to Motor Wheel, retaining a 7 percent stake in the new company, the firms announced.
Late last year, Varity, which spun Hayes Wheels out of its fold in 1992, had made an unsolicited bid to reacquire the firm. The merger with Motor Wheel should prove better for all parties involved, Mr. Virag said.
``They can focus on wheels,'' he said, whereas Varity's emphasis on brake systems and diesel engines could have diverted financial and personnel resources away from Hayes Wheels.
Motor Wheel had been a subsidiary of Goodyear until it was spun off in 1987.