Atar Capital Purchases BorgWarner Plant in Water Valley

An article by the North Mississippi Herald

CEO: Acquisition Will Bring Stabilization And Transformation

WATER VALLEY – A Los Angeles-based global private investment firm has purchased the BorgWarner plant in Water Valley and related operations. ATAR Capital announced in a press release on Jan. 6 that it had completed a carveout acquisition of BorgWarner’s North American Controls business, a wholly-owned and operated division of BorgWarner. The transaction was completed on December 31, 2021.

The acquisition includes the Water Valley manufacturing site along with related sales and engineering operations in Detroit, Mich. The business is a leading supplier of transmission solenoids, engine solenoids, start-stop accumulators, and hydraulic control modules throughout North America. The news first circulated in the community on Jan 4 as ATAR Capital’s leadership team meet with workers on all three shifts at the Water Valley plant. “The leadership team with ATAR was right here last week when we were announcing it,” reported interim CEO Ramzi Hermiz. “Cyrus Nikou, the founder of ATAR Capital, was here communicating with workers on all three shifts”.

BorgWarner announced the sale as part of the company’s accelerated electrification strategy expected to bring the company’s electric vehicle revenue from less than three percent of total revenue in 2021 to approximately 45 percent in 2030. Also outlined in this strategy by BorgWarner is a target to dispose of $3 billion to $4 billion in annual revenues from its internal combustion engine portfolio by 2025, with approximately $1 billion of that targeted to be executed by late 2022. BorgWarner’s new strategy created an opportunity for ATAR Capital, Hermiz explained in an interview with the Herald Monday afternoon.

“When we looked at what is happening in Water Valley, we see a business that is performing very well. It has a strong and talented workforce, has success in the market, and has a strong reputation,” Hermiz reported. The interim CEO noted that the products produced in Water Valley make an internal combustion engine more efficient, greener, and better for the environment. “We see the ability to expand,” Hermiz added.

The focus of the expansion includes both increasing the company’s market share of products already in production at the plant and developing future technology for engines and high-speed transmissions that will increase the fuel efficiency of internal combustion engines. “But also if you look at electric vehicles (EV), there are applications of controlling fluid flow. Maybe not an automatic transmission, but there is battery cooling and other activities – we still feel that this product has a life and opportunity,” Hermiz explained about current production. “We talk about going to an EV environment, and we will, but there are also hybrid electrics. There are all these other versions of electrifications.”

Transforming the Company

Hermiz shared ATAR Capital is not approaching the management of the plant as a major restructuring initiative, and instead, the goal is to transform it into a higher growth company. “Frankly under the prior ownership, the business wasn’t being invested in. They had it in a decline, which is partly why they wanted to exit. But we see it as an opportunity for growth,” he reiterated. The CEO also cautioned that the company is not immune to the current challenges in the automotive industry with supply chain interruptions, commodity price increases, and the global chip shortage that impacts the overall volume of vehicles produced. “I would say we are sized for what the market will be and continue to go on that path,” he added about the current workforce.

With the acquisition, ATAR purchased existing contracts serving blue-chip automotive and commercial vehicle OEMs (original equipment manufacturer) including Cummings Engine, Ford Motor Company, General Motors, and Stellantis. Hermiz also provided insight about the lag time between quoting applications for new businesses and production. “We will quote something this year, but not go into production for a couple of years. There is a valley you have to go through to come out on the other end. But that being said, we are going to look for opportunistic growth opportunities. We are primarily automotive, but we believe there are still more opportunities in commercial vehicles and industrial applications, even water vehicles,” Hermiz added.