Europe’s Biggest Independent Automotive Remanufacturer Buys Spanish Turbocharger Specialist
The Danish remanufacturing company BORG Automotive has acquired the Spanish turbocharger company Turbo Motor Inyeccion S.L., adding remanufacturing of turbochargers to its business portfolio. With the acquisition, BORG Automotive strengthens its presence on the important South European markets and consolidates its position as the biggest independent producer of remanufactured automotive parts in Europe.
BORG Automotive, owned by Danish industrial conglomerate Schouw & Co., just announced they will acquire Turbo Motor Inyeccion (TMI), a Spanish remanufacturer of turbochargers. TMI, headquartered in Spanish Pamplona, generated a revenue of DKK 105 million last year, resulting in a DKK 12 million profit. TMI occupies about 135 employees and is one of the leading European companies in the market for remanufacturing of automotive turbochargers:
- BORG Automotive has a clear and ambitious growth strategy relying on both organic growth and acquisitions, and we have over the past few years worked on several specific acquisition cases, explains CEO Kim Kruse Andersen of BORG Automotive and continues:
- By acquiring TMI, we now take the first big step in this strategy. TMI is a healthy and well-run family-owned business specialized in remanufacturing automotive turbochargers.
The aftermarket for automotive parts is currently in a consolidation process, making it hard for medium-sized companies. Due to the market conditions, TMI had to choose between expanding their own business or be included in a bigger group such as BORG Automotive. TMI chose to join BORG Automotive, mainly because of its good reputation:
- My family and I are very happy to join BORG Automotive. We have been in contact over an extended period of time, and we believe that TMI will have the best conditions for continuous growth with BORG Automotive. Personally, I am also pleased that my two sons will continue to be a part of the company. I am confident that they will continue to commit themselves to the company and help fulfil its potential, says founder and chairman of TMI, Jesús Lizarraga.
The acquisition is expected to be finalized during the fourth quarter of 2020. After the acquisition, BORG Automotive will employ 1,500 people and have production sites in Poland, England, and Spain as well as sales offices in Denmark and Belgium.
A new product
With the acquisition, BORG Automotive adds a high-growth product to its business portfolio:
- The combined European automotive fleet consists of around 280 million vehicles. About 140 million of these vehicles have one or several turbochargers, and we project this number to grow by 9 to 10 percent a year. This is due to the fact that most vehicles today are produced with smaller and more energy-effective engines. The automotive manufacturers use turbochargers to compensate for the reduced effect of the smaller engines, explains Kim Kruse Andersen.
BORG Automotive sells its products under four different brands: the international brand, Lucas, as well as the company’s own brands, Elstock, DRI, and Re-Ex. TMI is also a certified distributor of Lucas auto parts. According to Kim Kruse Andersen, existing as well as new customers will benefit from TMI already distributing a well-known brand. It is also important for BORG Automotive to expand its presence on the important South European markets.
Today, TMI remanufactures 65,000 turbochargers annually and currently has the capacity to produce 140,000 units a year.
First step in ambitious growth strategy
Schouw & Co. sees great potential in BORG Automotive and the recent expansion of the company’s portfolio. Schouw & Co. acquired BORG Automotive three years ago, and the Danish industrial conglomerate considers growth through acquisitions one of its key strengths:
- BORG Automotive is a leader in an attractive and long-term sustainable market. In terms of the circular economy, the automotive industry is far ahead in several areas, and BORG Automotive has a leading position in all the European markets where the company is engaged, says CEO Jens Bjerg Sørensen at Schouw & Co. and adds:
- As an active owner, we have an obligation to support the thriving growth that BORG Automotive has experienced over the past years. We aim to increase both size and reach and will continue working on taking BORG Automotive to the next level. The acquisition of TMI is the first step, but we will not stop here. Our ambition is to continue the development of the biggest independent producer of remanufactured automotive parts in Europe, and we have the determination and financial strength to achieve this ambition.
Due to standard regulations, the acquisition of TMI is first expected to be finalized during the fourth quarter of 2020, and the expectations for the 2020 financial year will therefore not be significantly affected. BORG Automotive expects a revenue of about DKK 850 million as well as a profit (EBITDA) in the DKK 75-85 million range.
About remanufacturing at BORG Automotive
All units at BORG Automotive go through a six-step remanufacturing process: First, defect units are disassembled from scrap vehicles. After a preliminary sorting, units with potential for remanufacturing are cleaned and surface treated. The cleaned units are then carefully inspected to determine whether they are qualified for remanufacturing purposes. After cleaning and inspection, the remanufacturing process begins for the parts to meet original standards. The remanufactured parts are reassembled in the same way as new original parts, and, finally, undergo a performance and reliability test.
Remanufacturing offers many benefits including the functionality, performance, and look of original automotive parts. In addition to this, the energy used for remanufacturing is reduced by up to 85 percent compared to manufacturing of a new part, and the environmental impact of scrapping is also significantly reduced. This makes remanufacturing an important part of the circular economy.
Both BORG Automotive and TMI sell remanufactured parts through an extensive European wholesale network and directly to OEM/OES manufacturers.