Valeo in Joint Venture with Samsung Climate Control

December 23, 2005

Cleary Gottlieb is advising world-renowned automotive equipment manufacturer Valeo in a joint venture with Samsung Climate Control that will combine the parties’ engine cooling exchangers businesses. In the transaction, Valeo will purchase 50% of the share capital of Threestar, a wholly-owned subsidiary of Samsung Climate Control, for €11.2 million subject to closing adjustments, with the possibility of an additional €600 thousand earn-out portion based on the joint venture’s 2005 EBIT. The joint venture will be named Valeo Samsung Thermal Systems Co., Ltd. The parties signed definitive agreements on December 23, 2005, and the transaction is expected to close by April 2006.

Valeo is already engaged in the design, manufacture and sale of various types of heat exchangers, including exhaust gas recirculation coolers, which Valeo sells to Korean car equipment manufacturers and suppliers through a Spanish subsidiary. Valeo will contribute its exhaust gas recirculation coolers business and equipment to the joint venture. The joint venture will act as agent for the sale of products to Samsung Climate Control’s current customers. Valeo and Samsung Climate Control will each enter into ancillary agreements with the joint venture to ensure its ability to operate on a stand-alone basis. Valeo and Samsung will share equal ownership of the joint venture, which will have the exclusive right to design, manufacture, sell and market products for passenger cars and light commercial vehicles in Korea to Korean-based equipment manufacturers and suppliers.