Private equity firms American Securities LLC and Apollo Global Management LLC, and Linamar Corp., have submitted bids for U.S. auto parts supplier Metaldyne LLC, in a deal valued between $800-million (U.S.) and $900-million, according to several people familiar with the matter.
The private equity bidders and Limanar, Canada’s second-largest auto supplier, met an Aug. 16 deadline for final bids, the people said. Carlyle Group LP has not yet decided who will get Metaldyne, they added.
Carlyle has hired Bank of America Merrill Lynch to find a buyer for the U.S. auto parts supplier, which the private equity firm and other investors bought out of bankruptcy in 2009, Reuters reported in April.
American Securities declined to comment. Representatives for Carlyle, Apollo and Linamar did not have an immediate comment. Bank of America did not return calls for a comment.
Linamar, which has a market value of about $1.4-billion (Canadian) and debt of around $700-million, has lined up financing for the deal, some of the people said. If successful, the Canadian company would boost its footprint in the United States and Europe, and increase exposure to Detroit-based auto makers and other major car makers such as Hyundai Motor Co.
Meanwhile, American Securities has been actively looking at the auto industry for investment opportunities.
The private equity firm is also bidding for HHI Group Holdings, which makes forged parts, wheel bearings and powdered metal engine and transmission components for the automotive and industrial sectors, two of the people said.
Plymouth, Mich.-based Metaldyne is projected to have about $150-million (U.S.) to $160-million in earnings before interest, tax, depreciation and amortization (EBITDA) in 2012, according to people familiar with the matter.
While Carlyle had hoped to sell Metaldyne for about six times EBITDA, or nearly $1-billion, buyers are valuing the company at closer to five times EBITDA – in the $800-million to $900-million range, the people said.
Metaldyne is among several automotive assets that have gone on the auction block over the past year as hedge funds, distressed investors and private equity firms that snapped up assets during the recession take advantage of improving vehicle production in North America.
A successful sale of Metaldyne would boost Carlyle’s fund profits after it returned a record $19-billion to fund investors in 2011.
Following a turbulent year in the financial markets in 2011, private equity firms are taking advantage of recovering debt markets to exit investments by selling assets to either another buyout firm or a trade buyer.
In December, Carlyle sold another auto parts supplier, Diversified Machine Inc, to Platinum Equity for an undisclosed amount.
Metaldyne now boasts about $1-billion in annual revenue and more than 4,000 employees. Its customers include all major automakers, including General Motors Co., Ford Motor Co., Chrysler Group LLC and BMW AG.