KOBLENZ (dpa-AFX) - Automotive supplier Stabilus wants to strengthen its industrial business by acquiring US group Destaco. The deal is expected to increase sales "significantly" and make the company more profitable. The MDax group wants to put $680 million (640 million euros) in cash on the table for the industrial automation specialist, it announced Thursday. The Koblenz-based company intends to pay only about a quarter out of its own pocket, with the Lowen share to be settled with debt capital. The acquisition is expected to be completed in the first half of 2024, provided the relevant authorities give the green light. The news was received with restraint on the stock market. The Stabilus share lost around 1.6 percent shortly after the start of trading. Stabilus is currently worth around 1.3 billion euros on the stock exchange.

According to company documents, the previous owner Dover Corporation is to be paid around 150 million euros from its own coffers. The remainder is to be settled in equal parts as a revolving credit facility and bridge financing. Stabilus described the transaction as an "important next step" in order to be able to implement its long-term strategy.

According to Group CEO Stefan Bauerreis, demand for automation of production processes is likely to increase in the coming years. On the one hand, there is a shift of production sites from emerging countries back to industrialized countries such as Germany. But because there is a shortage of skilled workers there, processes have to be automated.

The company is also making significant internal changes at its headquarters in Koblenz. The automotive supplier plans to invest ten million euros in modernization and automation. At the same time, further jobs are to be cut. The aim is to make the Group "fit for the future".

The Stabilus Executive Board hopes that the acquisition will provide a significant boost to the balance sheet. Including synergies, earnings are expected to increase by around nine percent annually until 2028. The operating margin (Ebit margin) is expected to rise to around 23 percent. Savings of more than 50 million euros are expected to result from a "joint market presence, a broader customer base and a complementary product offering." In the first nine months of the current fiscal year (to the end of September), Stabilus had sales of just under 910 million euros, of which 12.7 percent remained as operating profit (Ebit).

According to Stabilus, Destaco had sales of 213 million U.S. dollars in the past fiscal year. One fifth of this remained as earnings before interest and taxes (Ebit). The company, founded in 1915 in Auburn Hills (US state of Michigan), employed around 650 people at the time. Stabilus management promised to take over the entire workforce and all 13 sites. Destaco is to be continued as an independent brand under the Group umbrella./ngu/knd/tih