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Donnelly Magna Merger Huge
HOLLAND — Magna International’s acquisition of Donnelly Corp. made waves not just in West Michigan, but around the world.
Magna folded its mirror operations into the new, wholly owned subsidiary, Magna Donnelly, creating a business unit with annual revenues of $1.2 billion, thereby making it the world’s largest producer of interior and exterior automotive mirrors.
The deal, valued at $415 million in stock and assumed debt and finalized in September, was seen throughout the automotive industry as a good one for both sides.
But it didn’t come easily for Donnelly’s hierarchy, which, although a public company, was largely controlled by the Donnelly family, with five of 10 seats on the corporate board and 89 percent of the voting shares.
“It was not an easy decision because the roots go back a long way,” said John F. Donnelly, the corporation’s senior vice president of sales and marketing and the grandson of company founder Bernard P. Donnelly Sr.
Donnelly’s ability in electronic products — such as auto-dimming mirrors, camera systems that eliminate motorists’ blind spots around the vehicle or to the rear when backing up, and a product that automatically opens a car’s trunk when a person is trapped inside — were a major lure for Magna.
“They have some of the capabilities we were looking for. That is all very new and marketable stuff,” said Robin Gibson, Magna’s communications director. “They’ve always been on our radar screen, so we pursued them.”
John F. Donnelly said Magna and Donnelly make a “very complementary creation,” and insiders from both firms and area analysts agreed.
“I love it,” said James Gillette, an auto analyst and vice president of IRN Inc. in Grand Rapids. “It’s going to give a lot more opportunity to the Donnelly folks.”
He said Magna, which is based in Ontario, Canada, will help increase Donnelly’s content on vehicles.
“I just think they’re going to bring a lot of business to Donnelly,” Gillette said. “Magna does not have anywhere near the technical expertise that Donnelly has.”
Other analysts agreed, saying having a partner like Magna is a very valuable asset in the turbulent times the auto supplier industry is experiencing.
“They’ve hooked Donnelly to the wagon of a very strong company,” said David Cole, director of the Center for Automotive Research in Ann Arbor. “They’re (Magna) a very strong company.”
John F. Donnelly, who has spent most of his life in Holland and is heavily involved in the community, said the merger “has a lot more positive in it than not.” He said he personally agreed to the deal because of a “high priority for me to help build a stronger organization.”
He also expects Magna Donnelly to remain an important player in the Holland community.
“If Magna Donnelly achieves its goal, the spin-offs for the community are going to be very positive, and that’s what we’re aiming to achieve,” he said.
Magna employs 67,000 people and reported 2001 earnings of $580 million on revenues of $11 billion. Donnelly employs 6,000, about half of them in West Michigan at plants in Holland, Grand Haven, Norton Shores and Newaygo, and reported 2001 earnings of $2.5 million on revenues of $847.9 million.