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Tuesday, November 16, 2010

Federal-Mogul eyeing EV technology

Federal-Mogul Corp, the maker of powertrain and safety technology controlled by billionaire investor Carl Icahn, is scouting for companies to acquire with a focus on electric vehicle technology.

The Southfield, Michigan-based auto supplier is interested in supplying electronic components related to vehicle powertrains, electric motors and parts of the infrastructure needed for electric-powered vehicles, Federal-Mogul's chief executive, Jose Maria Alapont, said during the Reuters Global Autos Summit.

"We are already one of the worldwide global leaders in that sector that influenced the energy efficiencies and reduction of emissions," Alapont told Reuters. "With the new technologies that could be coming on to electrification, et cetera, we are looking for opportunities."

Federal-Mogul, which makes pistons, spark plugs, windshield wiper blades, brake pads and other auto components, has benefited from savings following its 2008-2009 restructuring as the auto market rebounds from the worst downturn since the recession of the early 1980s.

The company ended the quarter ended September 30 with more than $1 billion in cash.

Alapont described the company's current exposure to electrification as not "material enough" to disclose.

At the moment, technology used for plug-in and battery-electric vehicles is "not necessarily very profitable" because of the still-low sales in the nascent market, Alapont said.

"We have a lot of liquidity to get into high technologies and globalize it with our ... strong presence and then make it profitable like everything we do," Alapont said.

Federal-Mogul is not interested in becoming a battery maker, but would be interested in supplying parts for battery systems, Alapont said.

Alapont said there are opportunities to buy such companies in China, where there has been a good deal of investment in electrification, and deploy that technology to North America and Europe. In the third quarter, sales in China jumped 43 percent compared to a year earlier.

"We have tended to globalize from North America to Western Europe toward Asia," he said. "But we can do it the other way around."

Federal-Mogul has not been a large buyer in the past few years, but in July 2009 the company was on the cusp of what Alapont said would have been one of the largest acquisitions in the industry.

At that time, people familiar with the matter said Federal-Mogul was considering a bid for the assets of then-bankrupt supplier Delphi. It ended up not making an offer, and Delphi was eventually sold to a group of its creditors and emerged from bankruptcy.

"In the eleventh hour it was not possible," Alapont said, without naming Delphi. "Both companies, we did the right effort, but it was a complex, as well as I would say, political, legal environment that didn't make it possible."

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