Dana enters agreement for $157 million sale of non-core engine hard parts business

By Caroline Salls

Pittsburgh, Dec. 4 - Dana Corp. has entered into a stock and asset purchase agreement with Mahle GmbH for the $157 million sale of Dana's non-core engine hard parts business, according to a company news release.

The proposed purchase price includes $97.7 million in cash and the buyers' assumption of liabilities related to the business, according to the release.

In connection with the transaction, the parties will also enter into ancillary agreements, including a transition services agreement and a distribution agreement relating to Victor Reinz branded products.

According to court documents, Mahle will purchase substantially all of the assets used by Dana in the manufacture of piston rings, bearings and camshafts and in its aftermarket distribution business and will purchase all of the issued equity shares of a newly created non-debtor Dana company in France, to which some assets of non-debtor Dana company Glacier Vandervell SAS will be contributed.

Closing is subject to approval of the U.S. Bankruptcy Court for the Southern District of New York, government regulatory approvals and customary closing conditions.

Dana said it expects to complete the bidding process and to secure the regulatory approvals in time to close the sale in the first quarter of 2007.

The engine hard parts business consists of 39 facilities that manufacture piston rings, engine bearings, cylinder liners and camshafts under the Perfect Circleâ, Cleviteâ and Glacier Vandervellä brands.

"This divestiture is an important step in implementing Dana's reorganization initiatives and sharpening our focus on our core axle, driveshaft, structural, sealing and thermal products businesses for the automotive, commercial vehicle and off-highway markets," Dana chairman and chief executive officer Mike Burns said in the release.

"While no longer central to Dana's future direction, our engine hard parts business and people have strong potential for an owner that is strategically focused on this market segment."

Mahle will pay a $9.77 million deposit. Competing bidders must make a deposit of 10% of the purchase price.

If Mahle is not the high bidder, Dana will pay it a $1.95 million break-up fee and up to $977,000 in expense reimbursement.

Bids other than Mahle's must be for at least $3 million more than the cash portion of Mahle's bid and the value of the assumed liabilities.

Bids must be made in increments of $1 million.

A hearing on the bidding procedures is scheduled for Dec. 19. The company has requested the sale hearing be scheduled for Feb. 14, with the auction to be held Feb. 12.

Dana, a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets, filed for bankruptcy on March 3, 2006. Its Chapter 11 case number is 06-10354.

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