German car part firm accelerates $500m merger

Mann + Hummel is the latest car supplier to look to the US
GERMAN industrial filter maker Mann + Hummel has agreed to buy US peer Affinia to boost its annual sales by more than a third to $1bn (£640m) and gain access to the US market for heavy-duty and hydraulic filters.

Privately-held Mann + Hummel said it would not disclose the terms, but a regulatory filing by Affinia showed the purchase price was $513.1m. The German firm will also take on debt from Affinia, which stood at $822m at the end of June.

Automotive-parts suppliers have stepped up merger efforts over the past two years as many of them have cash in hand and are seeking greater size and global reach to give them more pricing power when negotiating with carmakers.

Expansion is also being driven by the demands of carmakers, who increasingly want suppliers who can move beyond their traditional products and provide a wider range of equipment, such as infotainment systems and self-driving technology.

This is the third deal within a year in which a US auto supplier has been bought by a German counterpart, following ZF’s takeover of TRW and Mahle’s acquisition of Delphi’s air-conditioning unit.

The private equity owners of Affinia will get the proceeds from the sale of its Latin American operations, which were excluded from the acquisition.

Affinia makes oil, air, fuel, cabin air, transmission, hydraulic, and coolant filters for vehicles and machinery ranging from race cars to excavators and wind mills.

Baird acted as exclusive financial advisor to Affinia on this transaction, led by Steve Guy, Chris McMahon and Adam Czaia.