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UPDATE 2-BorgWarner to sell spark plug business to Federal-Mogul
July 2, 2012 / 1:03 PM / 5 years ago

UPDATE 2-BorgWarner to sell spark plug business to Federal-Mogul

* Spark plug business 2011 sales were $80 mln

* BorgWarner to incur pretax loss of $50-$60 mln

July 2 (Reuters) - Auto parts supplier BorgWarner Inc said it would sell its spark plug business to smaller rival Federal-Mogul Corp for an undisclosed amount.

BorgWarner, which has a market value of more than $7.50 billion, said the spark plug business contributed $80 million to the company’s sales of $7.11 billion in 2011.

The spark plug business was a small part of German automotive supplier Beru AG, which was bought by BorgWarner in 2005.

The sale includes manufacturing facilities in Chazelles, France and Neuhaus, Germany. The two locations employ about 500 people.

BorgWarner will incur a pretax loss between $50 million and $60 million as a result of the deal. The company did not specify when it would book the loss.

Federal-Mogul, which has a market value of about $1.09 billion, said the deal would boost its spark plug production capacity to more than 350 million per year.

The deal marks Federal-Mogul’s first acquisition under the leadership of Rainer Jueckstock, who replaced CEO Jose Maria Alapont after he retired earlier this year.

Spark plug-based engines are likely to remain the dominant ignition technology for the forseeable future and present an attractive long-term market for Federal-Mogul, Jueckstock said in a statement.

The company, majority owned by billionaire investor Carl Icahn, recorded sales of $6.91 billion last year.

Shares of Auburn Hills, Michigan-based BorgWarner were down 1 percent at $64.62 in mid-day trading on the New York Stock Exchange, while those of Federal-Mogul were almost flat at $10.92 on the Nasdaq.

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