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Germany's Mann + Hummel agrees to buy U.S. peer Affinia

Published 08/17/2015, 02:11 PM
© Reuters. Filter system manufacturer Mann+Hummel's plant is pictured in the eastern German town of Sonneberg

By Maria Sheahan

FRANKFURT (Reuters) - German industrial filter maker Mann + Hummel has agreed to buy U.S. peer Affinia (N:AFN) to boost its annual sales by $1 billion - or by more than a third - and gain access to the American market for heavy-duty and hydraulic filters.

Privately-held Mann + Hummel said it would not disclose the terms, but a regulatory filing by Affinia showed the purchase price was $513.1 million. The German firm will also take on debt from Affinia, which stood at $822 million at the end of June.

Automotive-parts suppliers have stepped up consolidation efforts over the past two years as many of them have cash in hand and are seeking greater size and global reach to give them more pricing power when negotiating with carmakers.

Expansion is also being driven by the demands of carmakers, who increasingly want suppliers who can move beyond their traditional products and provide a wider range of equipment, such as infotainment systems and self-driving technology.

This is the third deal within a year in which a U.S. auto supplier has been bought by a German counterpart, following ZF's takeover of TRW [TRWTA.UL] and Mahle's acquisition of Delphi's [DCLC.UL] air-conditioning unit.

The private equity owners of Affinia will get the proceeds from the sale of its Latin American operations, which were excluded from the acquisition.

Affinia makes oil, air, fuel, cabin air, transmission, hydraulic, and coolant filters for vehicles and machinery ranging from race cars to excavators and wind mills.

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Mann + Hummel said Affinia's business would continue to operate separately from its own for the foreseeable future.

Investment bank Greenhill and law firm Manatt, Phelps & Phillips advised Mann + Hummel on the deal.

Affinia Group, owned by private equity firm Cypress, was advised by Robert W. Baird & Co and law firm Hogan Lovells on the deal, which was first reported by Reuters on Sunday.

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