Boston, MA 08/19/2014 (wallstreetpr) – Sensata Technologies Holding N.V. (NYSE:ST) said that it would buy Schrader International so as to fulfill the growing demand for tire pressure sensors. It will buy the firm for $1 billion from Madison Dearborn Partners LLC.
The Sensors
Schrader International is into the manufacturing of tire-pressure monitoring sensors. It is a feature that sends alert signals to drivers whenever a tire is under-inflated. The technology is used in all the cars in North America. It will now be seen in Europe as a new regulation states all the passenger vehicles are required to get the TPMS installed in this year. The regulations can be enforced in China in the coming years.
The Significance Of The Deal
The new deal can enhance the profitability of Sensata in the coming years. It will add almost 18-21 cents per share in the earnings of 2015. Whenever the regulations are enforced in China, it will add up another 18-22 cents per share in the earnings. Sensata Technologies Holding N.V. (NYSE:ST) considers the China market as a big market for tire-pressure monitoring sensors. China market can see the production of 23 million light vehicles in this year. It accounts for 100 million sensor opportunity for the company. The installing of tire-pressure monitoring sensors will begin in South Korea next year.
The Future Expectations
The acquisition of Schrader can prove to be a great deal for Sensata Technologies Holding N.V. (NYSE:ST). Schrader owns about 50% of the tire-pressure monitoring sensors market share in North America. It also supplies TPMS in other regions including South Korea, China, Japan, United Kingdom and Germany. Schrader is expected to post revenue of $550 million in this year. It can add up around 13-16 cents per share in the earnings this year. The Schrader acquisition deal will be financed by Morgan Stanley Senior Funding Inc and Barclays Bank Plc.
