Standard Motor Products Inc. SMP announced that it has completed the acquisition of General Cable Corporation’s BGC automotive ignition wire business on May 27, 2016. The company acquired this business for $71 million, subject to post-closing adjustments.
The buyout included General Cable’s automotive ignition wire business in North America as well as its subsidiary in Mexico. In 2015, sales from this business were $96 million.
Standard Motor funded the acquisition along with the related one-time costs and integration expenses, through borrowings under its revolving credit facility. General Cable will utilize the proceeds from this transaction to reduce its outstanding borrowings. The integration of the acquired business is expected to be completed in 12−18 months.
Standard Motor believes that this acquisition will support its focus toward becoming the best ignition wire supplier. Further, it will enhance the company’s bottom line within one year, excluding one-time integration costs.
General Cable designs, develops, manufactures, markets and distributes copper, aluminum, and fiber optic wire and cable products for the energy, industrial, construction, and specialty and communications markets.
Long Island City, NY-based Standard Motor is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. The company stands to benefit from its solid brand recognition and regular capital deployment, which will enhance shareholder value. However, it is facing challenges due to rising selling, general and administrative expenses, the competitive nature of the automotive aftermarket, and customer concentration.
Standard Motor currently carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Autoliv, Inc. ALV and Superior Industries International, Inc. SUP. Both the stocks sport a Zacks Rank #1 (Strong Buy).
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