TI Group PLC, a British company that spent years building itself into a giant supplier of automotive fuel systems, is about to sell the business.
Three financial buyers - Blackstone Group LP, Doughty Hanson & Co. and Bain Capital Inc. - have emerged as front-runners along with a North American parts maker whose identity could not be learned.
The sale of TI Group Automotive Systems would create a stand-alone global supplier with sales in excess of $2.3 billion annually and a major presence in Europe.
A winner could be chosen within two weeks, and the deal could be closed by the first quarter of 2001, according to a source close to the deal.
Both Bain and Blackstone have automotive operations but would gain a significant presence in Europe. Both recently opened offices in London but have yet to carry out large manufacturing investments, according to the Financial Times. Doughty Hanson is Europe's largest private equity group.
Blackstone has a controlling interest in American Axle & Manufacturing Holdings Inc. Bain once had a controlling interest in the failed Cambridge Industries Inc.
Thomas McDonnell, vice president of communications for parent TI Group in New York, would say only that 'discussions are going on with a number of firms. All of (the offers) are being reviewed.'
VISTEON BOWS OUT
Four prospective buyers have left the bargaining table - Visteon Corp. and three financial buyers, CINVen, CVC and Texas Pacific Group, according to the source.
The planned divestiture of TI Group Automotive follows the planned merger of Smiths Industries PLC and TI Group. It is expected to be final this month. The new company will concentrate on aircraft engine parts and cockpit controls.
TI Group had hoped to raise $1.7 billion from the sale, but bidding is lower than what would have been expected in previous years.
Bidders are trying to anticipate the impact of a weaker North American automotive market on TI Group Automotive's valuation, and the cost savings the buyer will need to obtain from the new organization, the source said.
TI Group was the first company to offer a complete fuel system, including tank fuel lines. It did so through its acquisition of fuel-tank blow molder Walbro Corp. and fuel-line supplier Bundy Group. The complete system allows automakers to meet the most stringent emissions standards.
A CROWDED FIELD
The winning bidder still will face strong competition. Paris-based Inergy Automotive Systems - a joint venture between Solvay SA and Cie. Plastic Omnium SA - is the biggest plastic fuel-tank manufacturer with more than one-quarter of the global market. Other competitors include Kautex Textron (part of Troy, Mich.-based Textron Automotive Co.) and Visteon Corp. of Dearborn, Mich.
TI Group Automotive also is a supplier of brake, powertrain and refrigeration systems. It employs more than 20,000 people in 29 countries.
Rhoda Miel of Plastics News contributed to this report