International Automotive Components (IAC) and Shanghai Shenda Co. Ltd. (Shenda) have announced recently the signing of a definitive agreement to form a global joint venture (JV) partnership to supply soft trim and acoustics products to automotive OEMs. 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.
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.
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 centres 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.
“This new JV will transition Shenda from a regional Chinese soft trim and acoustics products manufacturer to a global supplier to the automotive industry. It will provide access to European and North American markets, complementing our current strong footprint in China” said Yao Ming Hua, Chairman of Shanghai Shenda Co. Ltd.
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. 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” said IAC President and CEO Robert (“Steve”) Miller.