Cerberus buys auto supplier ABC Group

Cerberus Capital Management LP has boosted its stake in plastic automotive components by acquiring ABC Group.

ABC, based in Toronto, has global blow molding and injection molding operations with more than $1bn (€900m) in sales.

ABC will be headed by CEO Mary Anne Bueschkens, former president and general counsel. Helga Schmidt, wife of co-founder Mike Schmidt, is stepping down as chairman and CEO. Derrick Phelps becomes president after a stint as deputy president. Mark Poynton will continue as executive vice president and chief operating officer.

“We look forward to our next phase of growth alongside Cerberus as we enhance and expand our integrated product solutions and further broaden our extensive thermoplastics manufacturing expertise,” Bueschkens said in a news release.

ABC runs 17 blow moulding plants in North America that logged sales of $825m (€743m) for the year ended June 30, 2015, according to PNE's sister publication Plastics News’ data. Its nine North American injection moulding operations netted sales of $322 million for the period.

ABC announced the deal on 1 July, a national holiday in Canada and the first day of ABC’s financial year.

ABC began moulding auto parts in 1968 in Toronto. It was a pioneer in blow molding thermoplastic elastomers, introducing blow molded chassis components, in 1984. The private company grew to a global business with 36 locations, including joint ventures, in North America, South America and Asia.

Helga Schmidt took over ABC’s reins in 2009 after Mike Schmidt’s death at the age of 78. Mike Schmidt emigrated from Yugoslavia to Canada in 1956 and in his early years was involved in processing equipment production. He and his partners had a knack for applying blow molding to new end uses and they carved a niche in blow molded auto parts before the company diversified into other markets, such as lawn and garden and chemical packaging.

Not all their ideas were adopted by auto OEMs. In the 1990s they tried to apply blow molding to auto intake manifolds when lost-core injection moulding appeared as an alternative to die-cast metal. The blow molding research hit a wall when it proved difficult to get the tight tolerances needed for the application.

ABC was recognised for its pioneering work on blow moulded thermoplastic elastomer chassis parts when the Society of Plastics Engineers’ automotive division gave it a Hall of Fame award in 2014, 30 years after ABC debuted the products on some General Motors Co. vehicles. ABC had worked on the technology since 1977, starting with blow molded TPE for rack and pinion steering boots. SPE noted that ABC accomplished the breakthrough by partnering with GM’s former Saginaw Steering Gear division and DuPont Co. Blow moulded TPE replaced thermoset rubber in the demanding end uses.

Mike Schmidt garnered awards from SPE and the former SPI Canada, and the company he co-founded won numerous supplier awards and certificates from global auto OEMs. ABC as a private company went about its business quietly as Mike Schmidt and his successors built a business that few outside the plastics and auto sectors appreciated. As the company opened new plants and formed joint ventures it offered few public announcements. Its sale of its fuel tank business to China’s State Development Investment Corp. in 2014 was one of only a few deals it revealed to the public.

Cerberus also is majority owner of Reydel Automotive Holdings BV of Baarn, Netherlands. Cerberus created Reydel Automotive in 2014, when it bought Visteon’s auto interiors business. Reydel runs 17 manufacturing facilities, six just-in-time assembly operations and eight technical centers in Europe, South America and Asia.

Cerberus invested in Reydel Automotive just five years after it was badly burned by investing in automaker Chrysler when it was floundering in a distressed vehicle market which was then made worse by the global credit crisis. Cerberus tried to revive Chrysler after it and co-investors spent $7.4bn (€6.6bn) to buy the company. They failed, losing billions of dollars, and Chrysler was saved by merging with Italian auto company Fiat.

New York-based Cerebus, founded in 1992, has more than $30bn (€27bn) invested in diverse sectors.

“We firmly believe in ABC Group’s proven business model, consisting of innovative product solutions and vertically integrated global manufacturing operations, and are confident that our automotive sector expertise and extensive operational capabilities will enable the company to continue to grow,” noted Cerberus managing director Dev Kapadia in a news release.

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