DETROIT - Among automotive suppliers, the proposed breakup of ITT Automotive has become the biggest poker game around.
At least four companies may make bids to buy part or all of ITT Automotive, according to industry sources.
The list includes Delphi Automotive Systems, Visteon Automotive Systems, Siemens AG and Tenneco Inc.
According to one source, these companies recently inspected ITT Automotive facilities. Although plant tours do not guarantee a bid, other sources offer reasons for these companies to be interested.
Visteon, of Dearborn, Mich., is marketing its ability to design entire chassis systems. Antilock brakes would be a key addition to Visteon's product lineup of axles, suspension parts and mechanical brake components. Moreover, Visteon wants to expand sales to non-Ford customers.
Delphi, based in Troy, Mich., makes antilock brakes for its corporate parent, General Motors, and is developing future technologies such as brake-by-wire. But Delphi also wants to expand sales to non-GM customers. ITT would help it do so.
Tenneco Automotive, of Deerfield, Ill., wants to make the 'corners' of a vehicle - that is, the suspension and brakes. The company has already formed a joint venture on such a project with ITT Automotive.
Siemens may bid on ITT Automotive's $1.7 billion electrical division, which makes small motors, switches and lamps. The German supplier dominates that segment. Siemens is less likely to bid on ITT Automotive's $2.2 billion brake and chassis division.
BOSCH ON THE SIDELINES
According to unconfirmed reports, bidders might also include such companies as Meritor Automotive Inc. of Troy, Mich., and Hayes Lemmerz International Inc. of Romulus, Mich.
But ITT Automotive's archrival - Germany's Robert Bosch GmbH - is likely to be a no-show. The merger of the world's two biggest makers of antilock brakes would set off antitrust alarms among U.S. and European regulators.
ITT Automotive is considered attractive property.
The company has a 'Who's Who' list of automotive customers in North America and Europe, and it has developed cutting-edge technologies, such as brake-by-wire and yaw control. Moreover, ITT Automotive is profitable. But it is vulnerable because it does not yield the same margins as ITT Corp.'s nonautomotive operations.
The acquisition of ITT Automotive makes considerable sense for megasuppliers that want to produce entire chassis systems for automakers. Antilock brakes are a key component, and the antilock brake business has become an exclusive club.
STRIKING A DEAL
So, when ITT Corp. put most of its Auburn Hills, Mich., automotive division on the auction block in March, chassis component suppliers went shopping.
ITT Automotive executives are not willing to confirm their list of bidders. But Frank Macher, president of ITT Automotive, offered four guidelines last week:
1. The $800 million components division - which includes fluid-handling technology - is not for sale. The other two divisions - brake-and-chassis and electrical components - are in play.
2. Alternatives such as a joint venture or a spinoff are not being ruled out, but Macher calls a sale 'a very strong option.'
3. If the businesses are sold, the move is not likely to occur until July or August.
4. ITT Automotive businesses may be auctioned off to more than one buyer. 'We'd like to sell it in one package,' Macher said. 'But it's likely that it will be sold in pieces, so we can get better shareholder value.'