Douglas & Lomason shares rise on merger .
FARMINGTON HILLS , Mich .
1996-08-30
Shares of Douglas & Lomason Co were up 4-1/2 at 30-5/8 Friday afternoon after Thursday 's announcement that the vehicle seat maker had agreed to be acquired by Magna International Inc for $ 31 a share , or $ 135 million .
Magna was up 1/8 to 48-1/4 on the New York Stock Exchange .
Douglas & Lomason has 4.45 million common shares outstanding , some of which are option shares to be purchased at exercise prices less than the $ 31 offered price .
The acquisition will beef up Markham , Ontario-based Magna 's North American car and truck seating business , allowing it to better compete with Johnson Controls Inc and Lear Corp .
Family-controlled Douglas & Lomason , which had 1995 revenue of $ 561 million , was finding it more difficult to compete for new seating contracts from vehicle makers , said James Hoey , chief financial officer .
" Unfortunately , in the auto industry these days , a $ 500 million company is not a big company anymore , " Hoey said . "
This merger makes us much more competitive . "
He added that Douglas & Lomason 's top executives have been asked to stay on with Magna after the merger , though their future roles have not yet been defined .
Douglas & Lomason 's profits were hurt in the past year by model changeovers , which had reduced production at some important customers , but are now recovering , analysts said .
The company earned $ 11.2 million on sales of $ 299 million in the first six months of 1996 , up from year-earlier earnings of $ 4.7 million on sales of $ 285.7 million .
Ford plans to cut its roster of 2,300 tier-one suppliers -- those it deals with directly -- in half over the next five years .
" The deal really levels the seating field somewhat , " said John Casesa of Schroder Wertheim & Co . "
It should give Magna the critical mass to be a bigger player in that market . "
Magna 's traditional strength has been instrument panels , door panels and other interior components .
Magna , Johnson Controls and Lear have been working to build up their capabilties to supply complete interiors to automakers , including seats , instrument panels , door panels carpeting and headliners .