Blog Coverage Superior Industries Acquires UNIWHEELS; Plans to Expand in the European Market

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LONDON, UK / ACCESSWIRE / March 24, 2017 / Active Wall St. blog coverage looks at the headline from Superior Industries International, Inc. (NYSE: SUP) as the Company announced on March 23, 2017, that it will commence a tender offer to acquire all the outstanding shares of UNIWHEELS AG. Superior Industries is the largest manufacturer of aluminum wheels for light vehicles in North America. The Company will execute the agreement, at an aggregate equity purchase price, of approximately $715 million. Register with us now for your free membership and blog access at:

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One of Superior Industries International’s competitors within the Auto Parts space, Lear Corp. (NYSE: LEA), is estimated to report earnings on April 26, 2017. AWS will be initiating a research report on Lear following the release of its next earnings results.

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Breaking down the acquisition

UNIWHEELS, headquartered in Germany, is currently the third largest supplier of aluminum wheels to the European OEM automotive market and Europe’s leading manufacturer of aluminum wheels for the automotive aftermarket. This transaction will immediately establish Superior Industries as the leading global supplier of aluminum wheels while diversifying its customer-base and end markets. The acquisition will expand Superior Industries’ geographic reach and offer a platform to better serve the global customers.

This transaction will be funded through a combination of debt, preferred equity, and balance sheet cash. The transaction has been approved by the Board of Directors of Superior Industries and UNIWHEELS Malta where the tender offer is expected to close around the end of May 2017.

Strategic Output of the Transaction

This agreement is viewed as a transformational step where it will create the largest global providers of aluminum wheels for the automotive OEM market while offering access to a premium client base, including the likes of BMW, Mercedes, Volkswagen, and other carmakers. The transaction will help Superior Industries leverage the extensive global manufacturing capacity of the combined venture, hence creating a larger platform for further investment to deliver greater value.

Superior Industries primarily operates in North America while UNIWHEELS is the leading aftermarket aluminum wheel manufacturer in Europe. This transaction will deliver simultaneous benefits for both units. The agreement is immediately accretive to EPS where Superior Industries anticipates $15 million in annual run-rate synergies by 2020. Sales and volumes are set to be balanced midst the two primary markets, North America and Europe.

Terms of the Agreement

Under terms of the agreement, UNIWHEELS Malta will receive cash consideration of 226.5zl per share post the close of the tender offer. The Company’s public shareholders are set to receive cash consideration of approximately 236zl per share, equivalent to the volume-weighted-average-price for the prior 3 months. Superior Industries will commence a tender offer for 100% of the outstanding shares of UNIWHEELS.

Financing

The transaction to acquire 100% outstanding shares of UNIWHEELS is to be financed with about $660 million of newly funded debt, consisting of $400 million Senior Secured Term Loan B and $260 million of Senior Unsecured Notes, as well as $150 million of Preferred Equity, consisting of $100 million of Series A convertible redeemable preferred stock and $50 million of Series B preferred stock. Following the completion of the transaction, Superior Industries anticipates that it will reduce its annual dividend from $0.72 per share to $0.36 per share.

Superior’s Growth Prospects

This deal is a formidable step under Don Stebbins’ (the CEO of Superior Industries) strategy to expand North America’s largest wheelmaker. Stebbins has been slashing operating expenses by nearly $50 million between FY14 and FY16. Stebbins’s leadership has helped increase the Company’s income to more than $41 million for FY16 from $22.8 million for FY13. Superior Industries is offering $57.20 per share for the shares held by UNIWHEELS Holding and $59.60 per share for the public shares.

Stock Performance

At the closing bell, on Thursday, March 23, 2017, Superior Industries International’s share price finished yesterday’s trading session at $25.60, rising 2.40%. A total volume of 419.18 thousand shares exchanged hands, which was higher than the 3 months average volume of 145.44 thousand shares. The stock has advanced 8.47% and 19.55% in the last month and past twelve months, respectively. The stock is trading at a PE ratio of 15.81 and has a dividend yield of 2.81%. The net market capital for the Company’s stock stood at $638.46 million as per Thursday’s valuation.

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