B. Riley Diversity Equity Fund

Research in Action

A CASE HISTORY: REMY INTERNATIONAL

In late July 2015, BorgWarner announced its plans to acquire and merge with electrical auto manufacturer Remy International. Subsequently, the transaction was completed by year-end 2015. The firm had identified purchasing efficiencies, redundant public company expenses, other cost synergies and numerous opportunities to accelerate growth through the combined businesses. Here are some highlights from our Research Group's own in-depth analysis of the opportunities presented by BorgWarner's actions.

  1. Calling the automobile electrical manufacturer, Remy International, “a sleeping giant,” B. Riley & Co.'s Research Group noted that the firm has a “significant intermediate-term opportunity to grow organically, especially in China" and commenced a stock purchase program which began in May 2013.
  2.  B. Riley & Co.'s Research Group expected strong fourth quarter results for the company and raised its target price. Remy had focused on updating its backlog, which B. Riley believed would likely continue to carve a highly visible path for the firm's revenue growth through 2017.
  3. In the fourth quarter of 2014, Remy share prices experienced choppy, downward pressure. Convinced that the firm's growth profile was unchanged – and with China accounting for 20% of its business – B. Riley Asset Management bought additional shares at attractive prices.
  4. Toward the end of second quarter, 2015, Remy had gained a greater market share after it managed to displace entrenched competitors in Europe and Brazil. In a dramatic turn, company improvements and fresh ambitions on the part of BorgWarner led to the announcement to purchase Remy International, Inc. for $29.50 a share in cash.