SHANGHAI, China (December 21, 2016) – International Automotive Components (IAC) and Shanghai Shenda Co. Ltd. (Shenda) today announced the signing of a definitive agreement to form a global joint venture (JV) partnership to supply soft trim and acoustics products to automotive original equipment manufacturers (OEM). A UK affiliate of Shenda will acquire a 70% stake in the UK-based JV based at an enterprise value of USD $570 million. IAC will maintain a 30% interest. The JV, which will be named at a later date, expands an existing, successful JV partnership between affiliates of IAC and Shenda spanning nearly two decades.
Similar to IAC and Shenda’s existing JV, the new JV’s management team will be comprised of experienced leaders from IAC. Its operations will include substantially all of IAC’s soft trim and acoustics operations, consisting of 21 manufacturing facilities and 4 technical centers worldwide. The JV is expected to generate more than USD $1 billion in annual sales from floor carpets, acoustic insulators, package trays, trunk trim and utility flooring products.The agreement is subject to various conditions, including third-party consents and other conditions customary for transactions of this type. In connection with the transaction, IAC and its affiliates will enter into various ancillary agreements providing IAC with customary minority shareholder rights with respect to its equity interest in the new JV.
“This new JV will transition Shenda from a regional Chinese soft trim and acoustics products manufacturer to a global supplier to the automotive industry,” said Yao Ming Hua, Chairman of Shanghai Shenda Co. Ltd. “It will provide access to European and North American markets, complementing our current strong footprint in China.”
As a key action in IAC’s long-term business strategy, called 2020 Vision, the proceeds from the formation of the JV will allow IAC to continue investing globally in its core Cockpit & Overhead Systems business. “The resulting investment will make IAC a stronger global Tier One supplier in the interiors space,” said IAC President and CEO Robert (“Steve”) Miller. “It also demonstrates that IAC’s principal owners, funds managed by WL Ross & Co. LLC and Franklin Mutual Advisers LLC, remain fully committed to the future of IAC.”
Shanghai: Flanked by executives from both companies, IAC CEO Steve Miller (right) and Shanghai Shenda Chairman Yao Ming Hua sign the agreement to form a global joint venture that will become the next leader in automotive textiles.