Dana aftermarket split marked as positive move

Jan. 1, 2020
The recent news of Dana Corporation’s sale of its aftermarket properties is likely to lead to bigger and better things for that division, according to one aftermarket investment banking firm.

The recent news of Dana Corporation's sale of its aftermarket properties is likely to lead to bigger and better things for that division, according to one aftermarket investment banking firm.

Dana Corporation announced in July its intention to sell the company's Automotive Aftermarket Group (AAG) to Cypress Group LLC for $1.1 billion in cash, so the company could focus on core properties like its original equipment business.

“Clearly, [Dana] has been under pressure to reduce debt and improve the core operating asset performance,” says Darrell Butler, principal of investment banking firm Billow Butler & Company LLC. “The automotive aftermarket was not viewed by them as a core business. It’s a healthy thing to take a non-core asset and put it in the hands of a growth-minded owner.”

The sale, expected to close in the third quarter of 2004, will go toward reducing debt, funding pensions and returning Dana to investment-grade status.

As part of the deal, two former executives of Echlin Inc., which was acquired by Dana, will be instrumental in the transaction. Larry McCurdy, former CEO, and Joe Onorato, former CFO, have agreed to serve as directors of the new investment, supporting Cypress management’s strategic plan, according to Michael Finley, managing director of Cypress.

Cypress, a New York-based private equity group with more than $3.5 billion in commitments, will take over Dana’s Brake Parts Inc., Wix Global Filtration and Beck/Arnley, as well as Quinton Hazell, a European property. The sale will include 52 facilities and 13,000 employees worldwide.

“Cypress will likely grow this business aggressively by adding some more aftermarket brands,” says Butler, who adds Cypress could very well be a publicly traded company someday.

Dana, based in Toledo, Ohio, plans to retain distribution and marketing for such engine components as piston rings, gaskets and engine bearings in its Automotive Systems Group.

“Having spent considerable time with people at the Cypress Group, we’re certain they have a clear and bright vision of what our business should be,” says Terry McCormack, president of Dana’s AAG.

Michael Burns, Dana chairman and CEO, states, “The completed transaction will provide Dana with important strategic and financial flexibility, which will be used to further invigorate our core businesses and better serve our global original equipment customers.”

Dana’s AAG posted net sales of $2 billion in 2003. According to company officials, Dana’s net debt has been reduced from a high of $2.8 billion in June 2001 to $1.8 billion on March 31 of this year.

Credit Suisse First Boston LLC and Goldman, Sachs & Co. will act as Dana’s financial advisors.

Founded in 1904, Dana Corporation employs approximately 45,000 people worldwide and sales for the company totaled $7.9 billion in 2003.

Sponsored Recommendations

Best Body Shop and the 360-Degree-Concept

Spanesi ‘360-Degree-Concept’ Enables Kansas Body Shop to Complete High-Quality Repairs

Maximizing Throughput & Profit in Your Body Shop with a Side-Load System

Years of technological advancements and the development of efficiency boosting equipment have drastically changed the way body shops operate. In this free guide from GFS, learn...

ADAS Applications: What They Are & What They Do

Learn how ADAS utilizes sensors such as radar, sonar, lidar and cameras to perceive the world around the vehicle, and either provide critical information to the driver or take...

Banking on Bigger Profits with a Heavy-Duty Truck Paint Booth

The addition of a heavy-duty paint booth for oversized trucks & vehicles can open the door to new or expanded service opportunities.