Haldex to Divest Traction Systems Division to BorgWarner

Country:
Hungary

Haldex AB ("Haldex") has signed an agreement with BorgWarner Inc. ("BorgWarner"), a global vehicle supplier, to divest its division Traction Systems. The purchase price, which will be paid in cash, is SEK 1,425 m on a cash and debt free basis. The transaction is conditional on approval from competition authorities.

On July 16 of this year Haldex announced plans to reorganize its divisions into three separate listed companies. However, the Board of Directors believe that this divestment will provide superior value to the shareholders of Haldex than the proposed listing of Traction. BorgWarner provides a strategic fit with Traction and is a financially strong and experienced owner with the resources to accelerate its growth in the all wheel drive and torque transfer market.

"After the announcement of the reorganisation, we received strong interest in Traction from a number of potential buyers. This process has culminated in this transaction, which we believe provides maximum value to Haldex shareholders. At nearly 14 times historic earnings this price reflects the quality of Traction's business and the future earnings potential with the new owner", says Joakim Olsson, CEO of Haldex.

"Under Haldex' ownership, Traction has developed strongly and is now acknowledged as a technology leader in its field. There is a great strategic fit with BorgWarner which will enable us to bring our vehicle solutions to an even wider group of customers", says Ulf Ahlan, Head of Traction Systems

Haldex sales excluding Traction for the first nine months 2010 is estimated to SEK 4,292 m and an operating profit excluding Traction to SEK 244 [1] m. The transaction is estimated to result in a capital gain of approximately SEK 1,100 m.

The process to reorganize CVS and Hydraulics into separate listed companies' proceeds as planned.

Traction Systems is a leading player in the market for all wheel drive systems for passenger vehicles. Its customers include Volkswagen (including Audi, Skoda, Seat, Lamborghini, Bugatti), Volvo, Land Rover and GM. The production facilities are located in Landskrona (Sweden), Irapauto (Mexico) and Szentlőrinckata (Hungary). As per September 30, 2010 Traction had 329 employees. During the first nine months in 2010 Traction Systems' sales amounted to SEK 909 m and the operating profit to SEK 87 m. During the last twelve months to September 30, 2010, sales amounted to SEK 1,158 m and operating profit to SEK 104 m.\r\n