Southfield, MI, July 20, 2006--Lear said it has agreed to sell its European interiors systems segment to International Automotive Components Group, in exchange for a 34 percent equity interest in the joint venture.
Lear, a supplier of automotive interior parts, has been searching for a solution to "operating challenges" in the European interiors unit. Chairman and chief executive Bob Rossiter called the deal "a positive development."
Lear expects to log a $40 million charge when the transaction closes, likely in the third quarter, subject to closing conditions.
The company said it continues to seek solutions for its North American interiors business, which has felt the effects of declining sales and production at Ford and General Motors.
The European interiors segment -- which makes door and instrument panels and interior trim -- includes 9 manufacturing plants in five countries that together generate about $750 million in sales. International Automotive Components Group is a joint venture of Lear, WL Ross & Co. LLC and Franklin Mutual Advisers LLC and was formed to acquire the former European interiors operations of Collins & Aikman Corp., which filed for Chapter 11 bankruptcy protection in May. Private equity firm WL Ross is controlled by financier Wilbur L. Ross Jr.
Lear shares closed down 95 cents to $20.06 on the New York Stock Exchange as the auto parts sector slumped on earnings concerns, then added 44 cents, or 2.2 percent, to $20.50 in aftermarket activity.
