Reuters logo
Trelleborg in talks with KKR over stake in car parts maker - sources
January 26, 2016 / 2:45 PM / in 2 years

Trelleborg in talks with KKR over stake in car parts maker - sources

FRANKFURT (Reuters) - Swedish industrial rubber maker Trelleborg (TRELb.ST) is in talks to sell its roughly 1 billion euro (770.18 million pound) stake in TrelleborgVibracoustic to buyout group KKR (KKR.N) as a possible alternative to a stock market listing for the car parts business, according to two sources.

Trelleborg and German partner Freudenberg last year started preparations for an initial public offering (IPO) for TrelleborgVibracoustic, a Germany-based maker of automotive vibration control technology.

While Trelleborg initially expected an IPO to maximize the return on its 50 percent stake, the group has warmed to the idea of selling to a private equity firm as stock markets have tumbled, the sources said.

Other private equity groups such as PAI and Bain have also shown interest in buying the stake, the sources said, speaking on condition of anonymity as the matter isn’t public.

Freudenberg wants to stay invested in the business and may even ask to slightly increase its 50 percent stake, they added.

Freudenberg said it was studying different strategic options for TrelleborgVibracoustic, declining to specify, while Trelleborg declined to comment. The private equity groups declined to comment or were not immediately available.

“We will see how markets develop. If an IPO proves impossible, Trelleborg will likely go for the back-stop option, p.e. (private equity),” one of the sources said.

Investors including TPG and Onex had also approached Trelleborg over its stake, but are currently not pursuing the matter, one of the sources added.

A key issue in discussions is the potential debt level of TrelleborgVibracoustic after an ownership change, another source said.

Private equity groups often use only a small amount of equity and a lot of debt to buy assets, which is then loaded onto the target, but Freudenberg has expressed concern over ramping up TrelleborgVibracoustic’s debt, the source added.

KKR has shown it can strike successful deals with minority holdings. In 2010, it bought a 35 percent stake in Wild from the owner family and four years later benefited from a sale to Archer Daniels Midland (ADM.N) in a 2.3 billion euro deal.

Macquarie (MQG.AX) is advising Trelleborg, while Freudenberg is working with Lazard (LAZ.N), the sources said, adding Deutsche Bank (DBKGn.DE) and Citi (C.N) had been mandated as coordinators of a potential IPO.

TrelleborgVibracoustic makes anti-vibration components and modules, such as engine mounts and air springs, and has annual earnings before interest, taxes, depreciation, and amortisation of about 200 million euros.

A potential deal may value the company at up to 2 billion euros, the sources said.

Editing by Harro ten Wolde and Mark Potter

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below