We all remember Joseph Lucas, Ltd of Birmingham as the worlds leading producer
of shoddy wiring and sub-standard fiddly-bits. Lucas was a company forever
known as being quintessentially British. Announced today, Lucas (now known as
LucasVarity) is soon to become an American company. This, one of the last
fragments of the British motor industry, was not bought out but just basically
decided to move. The following are some quotes from an article released by
Bloomberg:
"London, Sept. 9 (Bloomberg) -- LucasVarity Plc, the world's second-largest
automotive brake maker, will reorganize as a U.S. company and list shares on
the New York Stock Exchange, part of an effort to move closer to its big
customers and take advantage of cheaper borrowing costs.
The headquarters will move from London to Buffalo, New York, where U.S. Varity
Corp. was based before the U.K.'s Lucas Industries Plc acquired it for $2
billion in 1996. The change puts the company closer to main customer General
Motors Corp. "
"``The momentum of the world's auto industry is concentrating on the U.S.
because of the strong economy and stable dollar,'' said Jim Gillette, an auto
industry consultant with IRN Inc.
Every 10 London-listed ordinary shares will convert to one share of the
reformed company, while American depositary receipts exchange one for one.
LucasVarity rose 2.5 pence to 210 in London while American depositary receipts
rose 11/16 to 35 in New York.
The move could raise the profile of LucasVarity, No. 2 in brakes after
Germany's Robert Bosch Gmbh, among suppliers. It ``will enable us to keep on
an equal footing with our peer group,'' Chief Executive Victor Rice said. The
company had revenue of 4.68 billion pounds ($7.8 billion) last year.
LucasVarity said it doesn't expect job losses in the U.K. or U.S. It employs
about 56,000 workers worldwide, including 10,000 in the U.S. Only about a
dozen people will have to transfer from London, spokeswoman Nancy Frederickson
said. Some 36 people work in the Buffalo office now, she said.
The changes reflect the growth in the company's U.S. investor base,
LucasVarity said. U.S investors make up 47 percent of all shareholders, up
from 33 percent, while the percentage of U.K. shareholders has declined to 47
percent from 63 percent.
U.S. investors might have a more favorable opinion of LucasVarity stock than
their U.K. peers, analysts said.
``Some of the investors saw the merger as half empty, not half full,'' said
Gary Lapidus, an analyst with Sanford C. Bernstein. ``From the U.S.
perspective, LucasVarity is embraced more favorably.''
The U.S. also is home to the world's biggest auto market, with 15 million car
and truck sales annually, and the world's two biggest automakers, GM and Ford
Motor Co. GM generates about 25 percent of LucasVarity's brake sales.
LucasVarity's light-vehicle braking systems, its largest division, is based in
the Detroit suburb of Livonia, Michigan. The division is the world's leading
producer of two-wheel antilock brakes.
Lower Borrowing Costs
The move to the U.S. could help LucasVarity pursue its growth strategy.
Borrowing costs in the U.S. are about 30 percent lower than in the U.K., which
would cut the cost of acquisitions that the company is considering for the
automotive or aerospace industries, Chief Operating Officer Neil Arnold said.
``It will make (an acquisition) easier,'' Arnold said.
While LucasVarity has amassed as much as 1 billion pounds it could use for
acquisitions, it also has been shedding businesses. The company said last
month that it will sell its heavy-duty brake business, which had 1997 sales of
170 million pounds ($281 million). It sold its Perkins diesel engine unit last
year for 810 million pounds ($1.33 billion) to Caterpillar Inc.
The main benefit of moving to the U.S. is increased investor communication,
Lapidus said. It will be easier for analysts to follow the stock once it's
registered with the U.S. Securities and Exchange Commission, he said.
LucasVarity's sales rose 8.6 percent to 1.076 million pounds. About 80 percent
of sales last year were auto parts, the other 20 percent in aerospace parts.
The company said earlier today it won contracts for flight control systems and
other parts worth 920 million pounds ($1.5 billion). "
As Lucas abandons thier traditional role as a maker of British car electrics,
what does this hold in store for future supplies of Lucas products? Does
Lucas even make old Lucas parts anymore or do they just license thier name?
Anyone who knows any more about this, please post.
Another rumor, the president of Lucas said maybe six months ago that
LucasVarity might lose the name "Lucas" because of the stigma attached.
Another piece of offbeat trivia, before he went on to become lead singer of
Black Sabbath, Ozzy Osbourne used to tune horns at the Lucas factory in
Birmingham! His mother worked there too.
John
British things in garage:
1959 MG Pinninfarina body Magnette Mk. III
1972 MGB
1986 Jaguar XJ-S with big stinkin' V-12
1969-on all Black Sabbath and Ozzy records
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