Eagle Ottawa LLC to be purchased by Lear Corp for $850 Million
A manufacturer and distributor of electrical power systems and auto seats, Lear Corporation has agreed to purchase Eagle Ottawa LLC, an automotive leather supplier for $850 million. This move is going to boost Lear Corp’s luxury seats portfolio and strengthen its core seating business.
Higher global vehicle production has led to a rise in sales of auto parts and car seats, particularly in China and the United States.
According to Lear, privately held Eagle Ottawa is known for craftsmanship of its products and superior quality. Eagle Ottawa is the world's biggest provider of automotive leather.
Approximately three-fourths of Lear’s revenue is from its seats business and it counts General Motors Co, BMW AG and Ford Motor Co among its top customers.
Eagle Ottawa has annual sales of around $1 billion and also supplies to BMW, Ford and General Motors.
Matt Simoncini, CEO of Lear said that the acquisition of Eagle Ottawa is another important step in strengthening their core seating business, expanding their component capabilities and accelerating profitable sales growth. According to Simoncini, this transaction will further enhance Lear's position as a global leader in automotive seating and will create significant value for their shareholders.
Lear expects the deal to add approximately 5 percent to its full-year earnings upon completion, which is expected in the first quarter of 2015.
Lear said that it intends to fund the transaction with cash on debt and hand.
Lear's financial advisers are Guggenheim Securities and Citigroup Global Markets Inc while its legal counsel is Winston & Strawn.
This year, shares of Lear had risen around 21 percent up to Wednesday's close of $98.11.
Based in suburban Detroit, Lear ranks No. 10 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $16.2 billion in 2013.