GenTek Inc. announced that its Noma Corporation subsidiary has acquired a wire harness and subassembly manufacturing business located in Reynosa, Mexico from Whirlpool Corporation.
As part of the transaction, Noma has entered into a 7-year agreement to supply wire harnesses, panel assemblies, copper tubing, and related components to Whirlpool's North American appliance production facilities. GenTek expects that this supply agreement will result in an increase of approximately U.S. $120 million in annual revenue.
"We are very pleased to have this opportunity to greatly expand and strengthen our relationship with Whirlpool in product lines that are central to Noma's strategic growth plan," said Ray L. Patel, Noma's president and CEO. "The Reynosa facility will enhance Noma's position as a leading supplier of wire harness and related subassemblies for the appliance, electronic and automotive markets."
The purchase price of $8.4 million, which may be subject to post-closing adjustments, includes $4.0 million in cash and a $4.4 million note payable in 4 installments during a 40-month period. The assets acquired by Noma include inventory, fixed assets, and the stock in Whirlpool de Reynosa, S.A. de C.V. The Reynosa facility, which employs approximately 3,000 people, was constructed by Whirlpool in 2003 as a means to consolidate the operations of three facilities.
GenTek said the acquisition will more than double Noma's appliance and electronic annual revenues with minimal upfront investment. In addition, the company said it provides significant flexibility to realize future cost savings throughout Noma's existing appliance, electronic, and automotive wire-harness business.
The company also expects that the addition of the Reynosa operation will be neutral to GenTek's net income and operating cash flow during the first year of operation, with the contribution to net income and operating cash flow expected to increase after the first year of transition.
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