Consolidation has added to the glut. Dozens of auto parts companies sought Chapter 11 reorganization in the past year. In 2004, five of them posted worldwide sales in excess of $1 billion. Then there are small, still healthy parts makers that need to sell out because they cannot meet demands by GM and Ford that parts be made in Asia.
There is no comprehensive list of automotive assets on the market. But analysts say Delphi and Collins & Aikman Corp. alone could push dozen of plants onto the auction block. And Ford is looking for buyers for the 23 plants and facilities it took back this month from former parts division Visteon Corp.
Investment banker David Eberly says the surge in deal opportunities this year has come in part from troubled companies suffering from steel or resin price shocks. Eberly, managing director of Beringea LLC of Farmington Hills, Mich., says these sellers face rock-bottom prices.
By one sale valuation -- multiples of annual cash flow -- prices have fallen from multiples of five or six and as high as eight last year to the low single digits his year.
Delphi, of Troy, Mich., could undermine prices as it works through the bankruptcy reorganization process. North America's largest supplier could benefit if it gave away -- or even paid someone to take -- its Automotive Holdings Group, analyst Glenn Reynolds of CreditSights of New York wrote in a report.
Rodney O'Neal, Delphi's COO, said last week that there are 11 plants in the group. Delphi suffered $2.1 billion in operating losses over the past three years to maintain its "fix, sell or close" holding pen, which posted sales $2.57 billion last year, according to Reynolds. That does not include another $1.1 billion in restructuring charges.
Analysts say Delphi also could put its giant Dynamics, Propulsion, Thermal & Interior group on the block as well. It posted sales last year of $14.12 billion. But operating margins have slipped to minus 0.5 percent as GM production volumes have fallen.
The division makes a variety of parts and systems, including sensors, exhaust systems, ignition systems, fuel systems, valvetrain systems, instrument panels, cockpits and heating and cooling systems.
CreditSights says the division generates solid cash flow when volumes are firm. But even if Miller wins UAW wage and benefit concessions, all the division can hope for is moderate profitability.
Delphi spokeswoman Claudia Baucus declined comment.
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