PARIS – Growth through acquisition has gone somewhat out of style in the auto industry, with the exception of private-equity firms picking up bargains, but German wire-harness maker Leoni AG is an exception.

The company last year was ranked among the world’s top-100 suppliers on some industry lists, with €1.4 billion ($2 billion) of automotive revenue after consolidating several €100 million ($145 million) acquisitions in Europe.

Leoni has completed the paperwork for the €255 million ($370 million) purchase of French supplier Valeo SA’s Connnective Systems wire-harness division, which it will take over Jan. 1. The additional revenue of about €2 billion ($3 billion) will raise the German supplier’s profile in the industry’s ranking.

Valeo’s wire-harness business was one of those deals too good to pass up, even if it doesn’t appear to fit Leoni’s plans. In the company’s 2006 annual report, Leoni CEO Klaus Probst says current business strategy is to reduce dependence on the auto industry, which accounted for 68% of revenues in the year.

As such, Leoni floated a €200 million ($290 million) bond issue last year to finance acquisitions in other wire and cable areas, such as Furas SA, the Spanish harness maker for appliances.

But Valeo was tantalizing, as Leoni’s customers include Daimler AG, Ford Motor Co., BMW AG, Porsche AG and General Motors Corp. Valeo’s wire-harness customers include PSA Peugeot Citroen, Renault SA, Fiat Automobiles SpA and SEAT SA of Spain.

“The two companies complement each other 100% in the market,” says Uwe Lamann, the chairman of Leoni’s wiring-systems division.

In Europe, the “new” Leoni will be the biggest supplier of wiring, with more than 24% of the market. Worldwide, it will hold 9% of the market and jump to the No. 4 position, behind Delphi Corp., Yazaki Corp. and Sumitomo Electric Wiring Inc. PSA will be its largest customer, for 17% of revenues.

Although both Leoni and Valeo have plants in the same low-cost countries – Morocco, Tunisia and Romania – Lamann foresees no consolidation because wiring plants generally are devoted to particular customers and sized to a specific volume.

All of Valeo’s plants are in Europe or North Africa, but Leoni already has three plants in China and others in Mexico and South America.

Valeo has been marketing the wiring business since early this year, having decided it no longer fit with its core competencies of driver assistance, powertrain improvement and comfort. The company plans to dispose of other businesses during 2008.

Leoni has been both purchasing market share and growing organically. In 2005, it bought two German companies, Neumatic Elektronik + Kabeltechnik GmbH and Kerpen GmbH and Co. KG. In 2006, it bought the Swiss supplier Studer Draht-und Kabelwerk AG and this year purchased Italy’s Silitherm SRL silicon cable maker and Spain’s Furas.

Leoni won new contracts in 2006 with BMW, Daimler, Ford, GM and Volkswagen/Audi AG that will account for more than E500 million ($725 million) in revenues at their peak. Two-thirds of that will be new business and one-third is replacement business.

Valeo won new contracts in 2006 for a future SEAT vehicle, future Renault cross/utility vehicle and new Logan models.