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Buy-out firms bid for TI Automotive

30 Sep 2011

Global private equity firms Bain, Carlyle and London’s Pamplona Capital have lined up to buy auto parts producer TI Automotive, in an auction which could reach around $1.5bn.

According to Reuters, the US-based company, which supplies systems that control, sense and deliver fluids and vapours in automobiles, has 18,500 employees at 130 locations in 28 countries.

The owners, a group of shareholders led by hedge funds, reportedly began looking for buyers earlier this year, but strict credit markets deterred potential investors. Final bids are expected next month.

Analysts estimate TI Automotive’s annual EBITDA to be about $250m. The company is valued at between $1.4bn and $1.5bn.

Cooper Standard, the company’s direct rival, is also being eyed by Carlyle, and is reportedly valued at more than $1.5bn. The two companies are the largest in their industry.

Private equity firms have found it increasingly difficult to finance acquisitions due to the nature of the loans they require, which are usually leveraged or involve high-yield bonds. These are risky forms of borrowing which many banks tend to avoid when credit markets contract, making large acquisitions costly.

Carlyle recently acquired ITRS Group, a provider of real-time monitoring systems for the world’s financial institutions, for an undisclosed sum.

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