Continental concludes Veyance acquisition

Brazilian antitrust authority CADE (Council for Economic Defence) has approved Continental’s acquisition of USA-based rubber company Veyance. The endorsement was granted on 29 January and follows the approval given by the United States Department of Justice in December. Continental concluded its acquisition of Veyance the following day. The transaction is valued at €1.4 billion.

Veyance operates globally in the field of rubber and plastics technology and in 2013 recorded sales of some €1.5 billion, with around half of this generated in the US market, with Latin America, Africa, China and the Asia region also considered important markets. Key Veyance products include conveyor belts, hoses and power transmission belts. The company will now be integrated into Continental’s ContiTech division.

“By integrating Veyance in our ContiTech division, we are expanding our global position in rubber and plastics technologies. In addition, this acquisition will bring Continental a significant step closer to its strategic goal of further increasing the proportion of industrial and end-customer business in its sales,” commented Dr. Elmar Degenhart, chairman of Continental’s Executive Board. “Continental has financed the acquisition entirely from liquid funds and available lines of credit. Veyance will make an immediate positive contribution to the corporation’s profitability.”

“Both the workforce and the customers stand to profit from the merger of the two companies,” added Heinz-Gerhard Wente, CEO of the ContiTech division. “Veyance will complement ContiTech in markets in which we have been underrepresented up till now. Another very important point is that the acquisition will enable us to significantly expand our industrial and end-customer business and, as a result, enable ContiTech to achieve a share of almost 60 per cent of its sales outside the automotive original equipment sector.”

ContiTech’s Conveyor Belt Group (conveyor belt systems), Fluid Technology (hoses and hose assemblies) and Power Transmission Group (power transmission belt systems) business units will benefit in particular from the improved global alignment. Because of the significance of the acquisition, antitrust authorities worldwide spent the last eleven months scrutinising the purchase and its impact on the respective markets. In response to the structural concerns expressed by some of the antitrust authorities, Continental will divest Veyance’s air springs business in the NAFTA region and its current steel-cord belting business in Brazil. In total, around 600 employees work in the operations that are to be divested.