ArvinMeritor sells emissions systems unit to focus on core markets

TROY, Mich. — Just a few months after boosting its marketshare in the commercial vehicle emissions solutions industry, ArvinMeritor has signed a definitive agreement to sell its Emissions Technologies business group to New York-based equity investment firm One Equity Partners (OEP) for about $310 million.

ArvinMeritor President and CEO Charles G. “Chip” McClure said the decision to sell the growing business is part of a long-term strategy to concentrate on “strengths and core competencies” such as chassis, drivetrain, and vehicle safety in light-duty and commercial markets.

There’s continuing demand in emissions systems, but ArvinMeritor
says it wants to focus on global drivetrain and chassis markets

“The proceeds from this sale will support our continued efforts to
strengthen our balance sheet, and increase our ability to invest in
technology, research and development that more closely aligns with our strategic focus on selected vehicle systems.

Those systems the company has identified as having “strong market positions, and higher margins,” include: Vehicle stability, such as ride and handling, braking and suspension systems, and wheels; Steer axles, drivelines, suspensions, trailer axles and all-wheel drive systems and hybrids; as well as apertures, such as body and control systems in doors and roofs.

McClure said he thinks the emissions business portfolio will be better served by a company in a position to invest capital and resources in its development.

Says OEP Senior Partner, Lee Gardner: “OEP is looking forward to … (executing) a focused and aggressive growth plan. We believe that the worldwide push to reduce pollutants and greenhouse gas emissions will create long-term opportunities for companies focused on advanced exhaust and emissions technology.”

Emissions Technologies President H. H. “Buddy” Wacaser and his management team will continue to lead the division following the close of the deal, which is expected in the third quarter of this year.

McClure said ArvinMeritor’s overarching strategy is to become a global systems leader in its target markets, starting with the implementation of an aggressive strategy in Asia, where the company currently has 9 percent and 16 percent marketshare in consolidated and joint ventures respectively.

Chip McClure says he wants to triple Arvin’s
Asian business in five year

The company said in a conference call it hopes to triple sales in Asia within five years, leading to a healthy mix of local and global OEM business.

“We also are planning to increase our global aftermarket and specialty businesses, and we are funding advanced engineering, research and development initiatives that will better position us for the challenges ahead,” he said.

Furthermore, the company’s new Performance Plus program is helping to identify revenue growth and cost savings opportunities worldwide. “Together with the transaction we are announcing today, Performance Plus will help us build a more focused, sustainable and profitable business model for ArvinMeritor,” McClure added.

2007 OUTLOOK:

After the sale of its Emissions Technologies business, ArvinMeritor predicts sales from continuing operations in fiscal year 2007 to be
in the range of $5.9 billion to $6.1 billion.

The company reduced its fiscal year 2007 forecast for light vehicle
production to 15.3 million vehicles in North America, down from 15.8 million forecast last quarter. And forecast for North American Class 8 truck production is 235,000 units in fiscal year 2007 (200,000 for the 2007 calendar year), unchanged from its previous forecast.

The Emissions Technologies business, which has 7,500 employees in operations in 19 countries, will have dual headquarters in Columbus, Ind., and Detroit.

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