South Korea’s auto parts maker Hanon Systems decided to take over the fluid pressure and controls business of Canada’s Magna International Inc. for $1.23 billion, the second largest Korean capital buyout of a foreign auto parts business after Samsung Electronics’ purchase of U.S. audio system provider Harman International Industries in 2016.
The company announced Thursday that its board of directors approved the plan to acquire the business of designing and manufacturing pumps for powertrain cooling systems and transmission systems, and electronic cooling fans from Magna. There are more than 4,200 employees and 10 manufacturing and engineering lines around the world for the business that raised $1.4 billion in sales last year, tantamount to almost a third of Hanon Systems’ 2017 total sales of 5.6 trillion won ($5 billion).
On Friday, shares of Hanon Systems gained 4.53 percent and ended at 13,200 won.
Founded in 1957, Ontario-based Magna is the world’s third largest auto components maker following Germany’s Bosch and Japan’s Denso. It supplies its products to global major automakers including GM, Ford, Chrysler, BMW, Volks Wagen and Peujeot. Its 2017 revenue amounted to $38.95 billion, up 7 percent from the previous year.
Industry observers expect that the latest acquisition would help the Korean auto part maker broaden its portfolio and learn some knowhow from Magna, in particular in green car-related technology.
Magna has made a massive investment in the fluid pressure and controls business. It has spent $441 million in developing powertrain for eco-friendly cars since 2011. It also has a reputation for having outstanding technology to make vehicles greener and lighter. It took over the global top auto transmission supplier Getrag in 2015 which has made various transmissions for more than 80 years.
Hanon Systems supplies automotive thermal and energy management solutions for conventional and electrified vehicles. Its major customers include Korean auto giant Hyundai Motor Co., Kia Motors Corp. and Hyundai Mobis Co. and some foreign car makers.
By Lee Seung-hoon and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]