The “interior module,” as the auto industry has come to know it, has just gotten more complex. Until now, the rapidly-growing module primarily included cosmetic items — seats, carpet, door panels, headliners and instrument panels.
But withCorp.'s $2.3 billion purchase of wiring specialist United Technologies Automotive, the interior module now can include the electrical architecture hidden under the carpet and inside doors that is so critical to the conveniences drivers expect, such as power windows and locks.
The deal makesthe world's largest interiors specialist, with $12 billion in sales. Lear beat out rival bidder Blackstone Group, which offered $2.2 billion.
About 75% of UTA's business is in electrical components and systems, with the biggest portion, 66%, in wire harnesses. The company also makes headliners, consoles and several products that have nothing to do with interiors: exterior mirrors, radiator cooling fans and motors for underhood components.
Lear bought the package from parent company United Technologies Corp., which has long wanted out of automotive because its profit margins (about 6% before taxes) fell below those at its other subsidiaries.
But that doesn't mean Lear wants to keep making radiator fans. Analysts suggest UTA's business not tied to interiors could be sold, perhaps to help finance the initial acquisition.
Integrating UTA will not be easy for Lear, which announced a restructuring plan last year to save $40 million and cut 2,800 employees. UTA has 44,000 employees.
UTA President C. Scott Greer says his division is a great fit with Lear. As of mid-March, he wasn't sure if he would stay with Lear.
A plum in the deal for Lear is a major new contract withCorp. to produce instrument panels for the high-volume Delta small-car platform in '01, part of the Yellowstone Project.