Valeo SA agreed Thursday to buy a Michigan-based auto-parts unit of ITT Industries Inc. for $1.7 billion, positioning the French company among the world’s top six partsmakers as it looks for faster growth in the United States.
The purchase of ITT Industries’ Electrical Systems makes Valeo the world’s biggest supplier of windshield wipers. The Auburn Hills, Mich.-based unit, which also makes ventilation systems and switches, has 12 factories in Europe and North America, 13,300 employees and had 1997 sales of $1.9 billion.
Paris-based Valeo wants to expand outside France, where its business is growing slowly while its tax bill from the Socialist-led government burgeons. It’s a good time to shop, as pressure from automakers to cut costs forces suppliers to buy and sell businesses to find the most profitable mix globally.
“It fits with Valeo’s strategy of making a big purchase of a company with a strong U.S. presence,” said Olivier Pouteau, analyst at brokerage CPR Finance. White Plains, N.Y.-based ITT Industries said earlier this year that it wanted to sell some of its auto-parts operations to concentrate on more profitable pumps and electronics. It said it will use the $1.3 billion in after-tax proceeds from the sale to buy back shares and pay off debt.
The Electrical Systems unit is among the ITT Industries businesses that have had layoffs because of strikes that have crippled General Motors Corp. The unit has idled 1,200 employees so far, two-third of the company’s 1,800 furloughed workers.
ITT Industries stock rose $1.12 to close at $35.19. on the New York Stock Exchange in Thursday trading.
