Bosch puts clamps on Pacifica
BY IAN PORTER | 17th Jun 2009
The move comes as Bosch’s parent company reported that directors expected the giant group to post its first trading loss since 1945.
Bosch already holds a 76.6 per cent stake in Pacifica after its 2007 takeover bid, but wants to raise that above 90 per cent so it can acquire any shares that are still outstanding under the compulsory acquisition provisions of the takeover code.
The offer of 23 cents a share values Pacifica at just $32.5 million and is little more than one tenth the $2.20 a share Bosch offered in 2007. That bid valued Pacifica at $311 million.
In November 2002, Pacifica’s share price topped $5 when the company announced that, through Bosch, its US factories had won a contract to supply the brake systems for the GMT9000 range of trucks to be produced by General Motors.
Pacifica’s earnings and share price declined steadily after that as sales to GM declined when American drivers moved away from SUVs and pick-ups.
Pacifica is Australia’s only supplier of disc brakes and front suspension “corners”, and also has extensive operations overseas, with two large factories in the US and operations in China and Thailand. It sold its European drum brake operation, AP Italia, in 2008.
Pacifica has posted a series of trading losses in recent years as the US operations, in particular, were hit hard by GM’s plunging truck sales. The GM volume in the US represented 50 per cent of Pacifica’s total sales.
Operations in Australia suffered from 2008 as sales of locally made cars plunged under the weight of soaring petrol prices.
For the year to December, Pacifica reported a loss of $242 million after directors decided to write down the value of the group’s plant and equipment by $145 million or almost 43 per cent. That reduced the company’s balance sheet value or shareholder equity to just $60 million.
Revenues plunged 18 per cent to $545 million.
Bosch expects to lodge its bidder’s statement with Pacifica, the Australian Securities and Investments Commission and the Australian Stock Exchange within two weeks.
In Germany, the chief of Bosch’s automotive parts business, Bernd Bohr, said sales had slumped 20 per cent so far in 2009 and that directors expected Bosch to report its first loss in 64 years.
“Despite the cash for clunkers incentive in Germany and some other countries, our turnover with auto components will fall by closer to 20 per cent than 15 per cent,” he told the Reuters news agency.
Sales in 2008 were down seven per cent to €26.5 billion ($A46.1 billion).
Mr Bohr said Bosch had no plans to acquire a car-maker as its parts rival Magna had done.
“We try to avoid conflicts of interest with our customers,” he said.
Mr Bohr said the internal combustion engine would have a future for at least 20 more years before electric cars could challenge.
“Combustion engines have a right to existence for the next 20 years, in particular in emerging markets, form the transport of goods and in long-distance traffic,” Mr Bohr said.