Canada's Linamar, private equity bid for Metaldyne, sources say
NEW YORK (Reuters) -- Private equity firms American Securities LLC and Apollo Global Management LLC, and Linamar Corp., have submitted bids for U.S. auto parts supplier Metaldyne, in a deal valued between $800 million and $900 million, according to several people familiar with the matter.
The private equity bidders and Limanar, Canada's second-largest auto supplier, met an August 16 deadline for final bids, the people said. Carlyle has not yet decided who will get Metaldyne, they added.
Carlyle Group LP has hired Bank of America Merrill Lynch to find a buyer for the U.S. auto parts supplier, which the private equity firm and other investors bought out of bankruptcy in 2009, Reuters reported in April.
American Securities declined to comment. Representatives for Carlyle, Apollo and Linamar did not have a comment. Bank of America did not return calls for a comment.
Linamar, which has a market value of about $1.4 billion (Canadian) and debt of around $700 million, has lined up financing for the deal, some of the people said. If successful, the Canadian company would boost its footprint in the United States and Europe, and increase exposure to Detroit-based automakers and other major carmakers such as Hyundai Motor Co.
Meanwhile, American Securities has been actively looking at the auto industry for investment opportunities.
The private equity firm is also bidding for HHI Group Holdings, which makes forged parts, wheel bearings and powdered metal engine and transmission components for the automotive and industrial sectors, two of the people said.
Suburban Detroit-based Metaldyne is projected to have about $150 million to $160 million in earnings before interest, tax, depreciation and amortization (EBITDA) in 2012, according to people familiar with the matter.
While Carlyle had hoped to sell Metaldyne for about 6 times EBITDA, or nearly $1 billion, buyers are valuing the company at closer to 5 times EBITDA, in the $800 million to $900 million range, the people said.
Metaldyne is among several automotive assets that have gone on the auction block over the past year as hedge funds, distressed investors and private equity firms that snapped up assets during the recession take advantage of improving vehicle production in North America.
A successful sale of Metaldyne would boost Carlyle's fund profits after it returned a record $19 billion to fund investors in 2011.
Following a turbulent year in the financial markets in 2011, private equity firms are taking advantage of recovering debt markets to exit investments by selling assets to either another buyout firm or a trade buyer.
In December, Carlyle sold another auto parts supplier, Diversified Machine Inc., to Platinum Equity for an undisclosed amount.
Metaldyne now boasts about $1 billion in annual revenue and more than 4,000 employees. Its customers include all major automakers, including General Motors, Ford Motor Co., Chrysler Group LLC and BMW AG.
Linamar, based in Guelph, Ontario, ranks No. 76 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $2.1 billion in 2011.Contact Automotive News