NEW YORK -- A century ago, at the dawn of the automobile era, TRW's predecessor companies developed the first two-piece engine valve and made wooden wheels for Henry Ford's Model T.
Now, TRW Automotive Holdings Corp., one of the world's biggest auto parts companies, is going public in an initial public offering expected to raise nearly $700 million.
TRW Automotive, with 2002 sales of $10.6 billion, was expected to price its IPO of 24 million shares at $28-$30 each and begin trading on the New York Stock Exchange on Tuesday under the symbol "TRW" .
"It has great branding, it's been in the business since 1906 or something," said Francis Gaskins of IPO Desktop, an online newsletter about IPOs.
Actually, TRW stared life as the Cleveland Capscrew Company in 1901, making valves for early model cars. One of its first executives was Charlie Thompson who provided the 'T' in TRW. In the 1960s it acquired the 'R' and 'W' of space technology firm Ramo-Wooldridge Corp.
Gaskin said the Livonia, Michigan-based maker of seat belts, brakes, steering and suspension systems, has $2.7 billion of goodwill and "one of the top-tier revenue streams in the business.
"But it's highly leveraged and 50 percent of its revenue comes from outside the United States," he said. "If the dollar comes back it will hurt results. Also it's a bit vulnerable because of high debt loads of $3.7 billion."
Analyst Mike Ward, at Creditsights, agreed it has "a great heritage. But its sales growth is nil and it has lots of debt.
"I think it is overpriced and I will not be startled if it (the IPO) is lukewarm."
PROCEEDS TO GO TO STOCK BUYBACK, DEBT REPAYMENT
TRW Automotive is controlled by private equity firm Blackstone Group, which purchased its stake a year ago from defense contractor Northrop Grumman Corp.
In a Securities and Exchange Commission filing, the company estimated its net IPO proceeds at $659 million, and said it planned to use $331 million to buy back stock held by an affiliate of Blackstone. Another $328 million will go toward repaying debt, the company said.
Underwriters Goldman Sachs, Credit Suisse First Boston and J.P. Morgan have an option to buy another 3.6 million shares.
Northrop acquired TRW Automotive as part of its acquisition of TRW Inc. for $6.7 billion in November 2002, mainly for its defense industry business. It sold off TRW Automotive to Blackstone for $4.7 billion, including debt.
Blackstone currently controls 78.5 percent of TRW's stock and Northrop Grumman owns about 20 percent, with management holding the remainder, according to the SEC filing.
After the offering, Blackstone will hold about 56.7 percent, Northrop Grumman 17.2 percent and the company's management group about 1.7 percent, TRW said.
Almost 99 million shares will remain outstanding after the IPO, which will also be underwritten by Morgan Stanley, Banc of America Securities, Deutsche Bank, Lazard [LAZ.UL] and Merrill Lynch.
The former TRW automotive businesses developed a vast array of products for the fledgling auto industry. These included fasteners and cap screw technology that was eventually adapted to create the first two-piece engine valve, as well as wooden wheels for Henry Ford's Model T in North America, and lighting and other electrical products in Europe.
Today, TRW Automotive supplies 40 major vehicle manufacturers, employs 61,000 people around the world and has 200 facilities in 22 countries.
Last August, former U.S. Treasury Secretary Paul O'Neill was elected a director of TRW Automotive. O'Neill, who was U.S. President George W. Bush's treasury secretary from 2001-2002, earlier joined Blackstone Group as a special adviser.