The friction materials market’s biggest player, BBA, could sell up if it fails to pull off a strategic merger, City analysts said this week.
The firm employs 1,200 staff at plants in Leeds, Manchester, Hartlepool, Telford and Cleakheaton. It has five European and one US subsidiary. Brand names include Mintex and Textar.
BBA Group’s friction division has a strong order book but car manufacturers its main customers are moving towards complete system suppliers.
‘Roberto Quarta, BBA Group chief executive, is very aware of the consolidation in the market,’ said William Mackie at Credit Lyonnais Laing. ‘BBA would sell its friction materials business or consider a joint venture to enable it to produce systems,’ he said.
The other main players in the market, Allied Signal and Federal Mogul, both have US operations that would complement BBA’s European bias. But any deal could run into problems in the US over monopoly issues.
ITT, which is strong in France and Spain, and LucasVarity, which is trying to buy south Korean brakes manufacturer Mando would also be interested, said Mackie. BBA tried to buy Lucas but lost out to Varity.
Paul Compton at Merrill Lynch said: ‘BBA doesn’t feel it would get the value for the business at the moment, and believes it can still rationalise it.’
Although one of the world’s biggest friction companies it is the smallest of BBA’s three divisions. For the first six months of this year, aviation accounted for £215.4m of turnover, non-wovens £190.6m, and friction materials £158.1m.
BBA said ‘we expect friction materials growth rates to strengthen. The success of recent productivity capital projects in Germany have led to similar investments in France and the UK.’