Exits: Questor Sells Off AP Auto for $300M –

Turnaround specialist Questor Management Co. last month cashed in on the trend toward internationalization by selling its exhaust systems maker AP Automotive Systems Inc. to automotive supplier Faurecia S.A. The deal, worth $300 million, including debt assumption, gives the French buyer a substantial and much-desired market share in the United States.

The sale marks its fifth exit from its Questor Partners Fund I LP.

Questor declined to comment on financial terms of the AP Automotive deal, but Questor principal Wallace Rueckel said the firm is very pleased with the rate of return on the investment.

Questor created AP Automotive by merging Tube Products Corp., acquired in February 1996, and AP Parts International, acquired from a Swedish holding co. in Dec. 1997. Sales were $300 million and $350 respectively. The combined company had about $500 million in sales after the company divested two non-core businesses.

Under Questor’s guidance, AP Automotive, based in Toledo, OH, has grown to $600 million in sales from $500 million. Its customers include General Motors, Ford, DaimlerChrysler, Volkswagen and Volvo.

The company makes exhaust systems-including exhaust manifolds, catalytic converters, mufflers, tubing and resonators-for automobiles.

Recently the company landed a significant contract-the Delta Program-to build exhaust systems for General Motors cars. The contract, which is worth about $250 million annually, will generate revenue between 2003 and 2004.

Rueckel said he expects AP Automotive, with the Delta contract and other growth, to have $850 million in sales in 2004.

The firm typically installs new management in troubled or struggling companies.

Both Tube Products and AP Parts were losing money, faced quality control problems and lacked good training for employees. “When we bought company we knew we had a lot of work to do,” Rueckel said.

Questor brought in new management to focus on driving down excess costs, improving quality, and implementing better working conditions for employees.

Questor’s job with AP Automotive is done, Rueckel said, and Faurecia will get further value out of the company.

“We think that once the fix has been done. It’s probably better off folded into another company now. It was time to sell, because the fixes were essentially behind us,” he said.

AP Automotive chief executive Terry Bernander, who had been put in place by Questor when it acquired Tube Products, will remain head of the company.

In a Faurecia statement, the company, based in Boulogne, France, said the acquisition would bolster its North America market share. More than three-quarters of AP Automotive’s 1998 exhaust sales were to North American-based companies while 98% of Faurecia’s were to those in Europe.

Rueckel said Faurecia, a $4 billion company focused on seating and exhaust systems, was attracted to AP Automotive because it adds major U.S. car makers like Ford and GM to its list of customers.

“AP Automotive gave [Faurecia] the opportunity to become the world’s third largest exhaust maker,” Rueckel said.