Big belt and hose makers joined as Continental concludes Veyance acquisition
Goodyear Gatorback brand belts and hose are now branded Continental Elite.
Hanover, Germany – After a drawn-out approval process, two of the largest belt and hose makers in the world were joined together on January 30, 2015. Continental AG completed the acquisition of Veyance Technologies Inc., Fairlawn, OH, from the Carlyle Group LP for about 1.4 billion euros (US$1.9 billion).
On January 29, the Brazilian antitrust authority CADE (Council for Economic Defence) cleared the transaction with certain conditions, thus providing the approvals necessary for completion. Continental originally announced its intention to acquire Veyance in February 2014.
Veyance Technologies sells Goodyear-branded industrial power transmission products; heavy-duty and lightweight conveyor belts; hydraulics; rubber track; and automotive and heavy-duty truck belts, hose, tensioners and air springs. Veyance was formerly known as Goodyear Engineered Products. Veyance had previously been acquired by Carlyle Group LP, a private equity firm, on August 1, 2007. [Editor’s Update, Feb. 3, 2015: Veyance continued to use the Goodyear brand name for its industrial products. As of now, Goodyear Gatorback belts and hose have become branded Continental Elite belts and hose.]
An international automotive supplier, tire manufacturer and industrial vendor, Continental is boosting its worldwide industrial business with this acquisition, which is its most significant acquisition in recent corporate history. Continental’s ContiTech unit, which also makes hoses and conveyor belts, was until now a competitor to Veyance.
Veyance operates globally in the field of rubber and plastics technology and in 2013 recorded sales of some 1.5 billion euros, around 90% of which were achieved in industrial business.
The workforce at its 27 plants around the world totaled 8,500 at the end of 2013. Veyance Technologies generates around half of its sales in the USA. Other important markets include Latin America, Africa, China and other countries in Asia.
Veyance’s product focus is on conveyor belts, hoses and power transmission belts. In 2013, ContiTech and Veyance together achieved sales totalling some 5.4 billion euros and employed around 38,000 staff worldwide.
“By integrating Veyance in our ContiTech division, we are expanding our global position in rubber and plastics technologies. In addition, this acquisition will bring Continental a significant step closer to its strategic goal of further increasing the proportion of industrial and end-customer business in its sales,” said Dr. Elmar Degenhart, chairman of Continental’s executive board in Hanover. “Continental has financed the acquisition entirely from liquid funds and available lines of credit. Veyance will make an immediate positive contribution to the corporation’s profitability.”
“Both the workforce and the customers stand to profit from the merger of the two companies,” says Heinz-Gerhard Wente, a member of Continental’s Executive Board and CEO of the ContiTech division. “Veyance will complement ContiTech in markets in which we have been underrepresented up till now. Another very important point is that the acquisition will enable us to significantly expand our industrial and end-customer business and, as a result, enable ContiTech to achieve a share of almost 60% of its sales outside the automotive original equipment sector.” ContiTech’s Conveyor Belt Group (conveyor belt systems), Fluid Technology (hoses and hose assemblies) and Power Transmission Group (power transmission belt systems) business units will benefit in particular from the improved global alignment.
Because of the significance of the acquisition, antitrust authorities worldwide had spent the past 11 months scrutinizing the purchase and its impact on the respective markets. In response to the structural concerns expressed by some of the antitrust authorities, Continental will divest Veyance’s air springs business in NAFTA and its current steel-cord belting business in Brazil. In total, around 600 employees work in the operations that are to be divested.