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November 22, 1999 01:00 AM

Cooper may purchase auto parts supplier Siebe

Jeffrey McCracken Crain News Service
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    DETROIT—Cooper Tire & Rubber Co. is expected to announce within weeks plans to acquire Southfield, Mich.-based Siebe Automotive—a supplier of automotive parts such as brake lines, gas lines and thermostats. If the acquisition goes through, it would transform Cooper's core business from tire manufacturing to supplying auto parts. More than half of Cooper's total sales would come from its automotive business.

    Individuals close to the deal say it will close in the near future. It would be Findlay, Ohio-based Cooper's second major purchase of an auto parts supplier within a month. Cooper closed a $757.4 million purchase of Dearborn, Mich.-based Standard Products Co. Oct. 27.

    Siebe, which has worldwide annual sales between $450 million and $500 million, employs more than 2,000 people globally.

    Siebe is a division of Invensys P.L.C., a British-based manufacturing conglomerate. The three sources for the deal did not disclose a purchase price.

    Two telephone calls to Invensys were not returned. A contact who declined to give his name at Taylor Rafferty Associates Inc., a New York public relations firm that works for Invensys, said Invensys would not comment.

    A Cooper spokeswoman said the company doesn't comment on rumors of this type.

    Siebe has three plants in northern Michigan and one in Tennessee, as well as plants in Tennessee, Mexico, the United Kingdom, Germany and the Czech Republic. The company has North American sales of around $230 million.

    Its largest customer is Ford Motor Co., from which it gets about 40 percent of its sales. It supplies parts for the Ford Fiesta and the F-Series pickup.

    Other Siebe customers include General Motors Corp., DaimlerChrysler A.G. and Volkswagen A.G.

    Siebe has been on the block for 18 months, according to two of the three sources. Siebe's parent company was formed in November 1998 through a merger of Siebe P.L.C. and BTR P.L.C., two large British engineering conglomerates.

    Invensys, the name the two companies chose, is a $14 billion operation with headquarters in London. The company is looking to get out of the automotive market, much the same way other conglomerates like United Technologies Corp. have in recent months.

    While Invensys is eliminating its auto-parts holdings, Cooper is increasing its own. The purchase of Standard, a $1.1 billion manufacturer of sealing, vibration control and tread-rubber products, pushed Cooper's annual sales to around $3.2 billion.

    It also made Cooper much more than just a tire manufacturer, with more than 40 percent of sales coming outside that market.

    "They are trying to become a global player among auto suppliers—more than a tire company, which is what they primarily were," said Dennis Virag, president of Ann Arbor, Mich.-based Automotive Consulting Group.

    "Cooper Tire is a very well-run company. They are really making a push to expand into global markets," Mr. Virag said.

    If Cooper does acquire Siebe, it would reduce tire manufacturing to less than half the company's business, accounting for about 43 percent of Cooper's annual sales. This is a marked contrast to just three years ago, when tires accounted for 85 percent of Cooper's 1996 sales.

    "They (Cooper) may be following the path of least resistance," said Edgar Faler, an analyst with Olde Discount Corp. in Detroit. Competition in the tire industry is so intense that Cooper could be trying to grow business in related areas that are more profitable, he said.

    Mr. Faler said the acquisition also would give Cooper a more balanced portfolio.

    "The tire industry is facing its most significant changes in a long time," according to Mr. Faler. "Everybody likes to chart their own course."

    Tire Business Staff Reporter Chris Collins contributed to this report.

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