$1.9B Magna deal will not impact Michigan operations

Michael Wayland
The Detroit News

Magna International Inc. on Thursday announced an agreement to acquire German transmission manufacturer Getrag for $1.9 billion.

Magna CEO Don Walker said the acquisition won’t have any direct impact on its operations in Michigan, which include more than 10,000 people at 27 manufacturing facilities and 11 engineering, product development and sales centers.

“I can’t quantify it, but given the expertise we are getting with the acquisition ... I think it will strengthen our capability and our offerings to our customers, which should help us in our existing operations with customers in North America,” he told news media Thursday during a conference call. “It’s more of an indirect impact.”

Walker said the addition of Getrag is part of an “evolution” of the company’s product portfolio connected to an ongoing review to identify key growth areas for the Canadian-based auto supplier, including powertrain as a strategic priority.

The companies plan to close the deal near year’s end, subject to a number of conditions including obtaining all necessary regulatory approvals.

Besides helping Magna substantially increase its powertrain business, the acquisition helps it expand its global footprint — particularly in China, the world's largest automotive market and the fastest growing market for dual-clutch transmissions, which Getrag is a leader in.

Getrag has significant joint-venture relationships with Ford, as well as Chinese automakers Jiangling and Dongfeng. Other Getrag customers include BMW, Daimler, Renault, Volvo and Great Wall. The company is valued at about $2.7 billion, including $762 million in debt and pension liabilities, according to Magna. Including joint-venture locations, Getrag has approximately 13,500 employees and operates 13 manufacturing and 10 engineering centers in nine countries in Europe, Asia and North America.

Walker said the company does not have plans at this time to make any reductions in employment.

Magna has about 133,000 employees working at 316 manufacturing operations and 87 product development, engineering and sales centers in 29 countries. It makes automotive systems, assemblies, modules and components, and engineers and assembles vehicles, primarily for sale to the car and light truck original equipment manufacturers.

The Thursday announcement is the most recent high-profile supplier acquisition in the past year involving a major transmission manufacturer. Earlier this year, German auto supplier ZF Friedrichshafen completed its acquisition of one of the largest U.S. auto suppliers, Livonia-based TRW Automotive Holdings Corp., in a $12.4 billion deal.

Industry analysts have speculated that suppliers must continue to grow to meet the growing demand of automakers and the global industry, which continues to change as new technologies and regulations enter different markets.

“I think the trend will continue to be the suppliers getting bigger,” Walker said. “The (automakers) ask them to do more, financing more and looking at developing technologies because the car of the future is changing and you need to have the ability to do research and development and bring new products and manufacturing processes to the market.”

Walker said the company “continues to make acquisitions,” but did not disclose any other potential targets: “I would expect if the right acquisition comes along and it fits our product, geographic and customer strategy and has the technology that we will continue to look at it,” he said. “But it really depends on the opportunity.”

The company has been growing its electronics and powertrain businesses, while exiting interiors and other smaller product areas, including battery packs.


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