Varity, Lucas explore merging

In yet another sign that consolidation among suppliers is far from over, Varity Corp. and Lucas Industries plc are talking about a "potential strategic combination" that would give them more muscle in the increasingly competitive antilock brake market. Varity, which derives more than half its $2.4 billion annual sales from brakes, is a strong player in North America, but not as big as ITT Automotive or Robert Bosch GmbH. Its other major business is Perkins diesel engines. Lucas is a major brake supplier in Europe, but draws about 16% of its annual sales from North America, where it also supplies engine-management technology and automotive electronics.