ROMULUS, Mich.—Hayes Wheels International Inc. said Dec. 9 that it signed a letter of intent to acquire a majority share of Lemmerz Holding GmbH, one of Europe's top wheel makers. The $295 million acquisition would create one of the world's largest wheel manufacturers holding original equipment contracts with nearly every major auto-maker in the world. The company also will supply 13 heavy-duty vehicle manufacturers.
Konigswinter, Germany-based Lemmerz produces steel and aluminum wheels for automobiles and heavy-duty vehicles in six plants in Germany, Turkey, the Netherlands, Spain, Belgium and Switzerland.
Hayes Wheels makes wheels in Michigan, Missouri, Georgia, Indiana, California, Illinois, Kentucky and Ohio, as well as Italy, Spain, Mexico and the Czech Republic.
``The combination of two of the oldest and most respected wheel manufacturers in the world will enhance the value we provide our customers because we are establishing a company that is the largest and most experienced supplier of wheels to the automotive and heavy-duty markets worldwide,'' said Ron Cucuz, Hayes chairman and CEO.
Aside from its European operations, Lemmerz has joint ventures in Canada, India, Brazil, Portugal and Thailand. Those facilities will give Hayes entry into markets where it has little presence.
Previously, Hayes had considered joint ventures in Asia, ``but we were not too quick to jump in,'' said a company spokesman.
Romulus-based Hayes Wheels has started due diligence on the transaction and expects to close the deal by the end of March, a company spokesman said.
If the transaction is approved, the new company will be named Hayes Lemmerz International Inc. and have an estimated $1.5 billion in annual sales.
Joseph Littlejohn and Levy, the private investment partnership that has a 43-percent interest in Hayes Wheels, has agreed to vote its shares in favor of the acquisition, the company said.
Stockholders of Lemmerz initially will receive shares of Hayes Wheels preferred stock, which will be convertible into 3.75 million shares of Hayes Wheels common stock. Lemmerz shareholders also will receive a $110 million cash payment.
Under the buyout agreement, Hayes Wheels will acquire 76.63 percent of the company and assume $55 million of Lemmerz' net debt.