Cooper Tire & Rubber Co. may sell its Cooper-Standard Automotive business and instead focus its resources on its tire business.
``At this time,'' said Thomas A. Dattilo, Cooper chairman, president and CEO, ``our board of directors believes that it is appropriate to evaluate strategic alternatives for the group. We believe that Cooper...may best be served by dedicating our resources to investing in our tire business and further pursuing global expansion.''
Cooper has retained international investment banking group Lazard Freres & Co. L.L.C. to assist it in the process.
With fiscal 2003 sales of $1.66 billion, Novi, Mich.-based Cooper-Standard Automotive is one of the world's 10 largest non-tire rubber products businesses. It makes fluid handling systems, body-sealing systems and active and passive vibration control systems-primarily for automotive original equipment manufacturers-at 42 plants in 12 countries.
Operating profit last year was $96 million, or 5.8 percent of sales, down from $117 million in 2002. Cooper-Standard represented 47 percent of Cooper's sales and 54 percent of operating earnings last year.
Cooper said it would use the net proceeds of a sale to reduce debt, invest in tire operations, return capital to stockholders and/or repurchase shares. Cooper's net debt stands at about $800 million.
Findlay-based Cooper's stock price closed March 24 at $19.79, up $1.23 or 6.6 percent from the previous day.
Standard & Poor's Rating Services put its ratings on Cooper's commercial paper and credit at ``CreditWatch with negative implications,'' saying the firm's credit profile could be weakened, depending on the disposition of the sale proceeds.
The divestiture has been ``reviewed internally for some time,'' Roger S. Hendriksen, director of investor relations, said.
Of late, Cooper has turned its attention increasingly to Asia, entering into a tire manufacturing joint venture in China with Taiwan's Kenda Rubber Industrial Co. Ltd. and agreeing to source all of its radial truck tires and up to 1 million radial car tires a year from China's Hangzhou Zhongce Rubber.
At the same time, though, the firm has allocated $33 million in investments in its four domestic tire plants.
Cooper has made non-tire rubber products since the 1940s. The Cooper-Standard business as it exists today was built primarily via Cooper's $757 million purchase of Standard Products Corp. in 1999.
More than two-thirds of Cooper-Standard's sales, or about $1.2 billion, are to the global operations of Ford Motor Co., General Motors Corp. and DaimlerChrysler A.G., according to company documents.
In addition, Cooper is a 50-50 partner with Japan's Nishikawa Rubber Co. Ltd. in the Nishikawa-Standard Co. joint venture and is a minority partner in a 49-51 joint venture in South Korea with Jin Young Chemical Co.