FRANKFURT/LONDON Alfa Laval (ALFA.ST) and Honeywell (HON.N) are bidding for private equity-owned Swedish air treatment group Munters in a potential 10 billion Swedish crown ($1.1 billion) deal, people close to the talks said.
Private equity firms such as TPG, Bain, KKR and EQT have also handed in first round bids by a mid-December deadline, the sources said.
Lenders are working on debt financings of up to 5.5 times Munters' approximate core earnings (EBITDA) of 780 million crowns, split between a mix of senior and subordinated leveraged loans, banking sources said.
Munters' owner, Nordic Capital, and the potential buyers declined to comment or were not immediately available for comment.
Munters is one of the world's largest makers of climate control systems. Ratings agency Moody's upgraded the group's rating to B2 last month, citing its improved earnings.
Nordic Capital took Munters private, paying 5.7 billion crowns for its shares in 2010 after a bidding war with Swedish engineering group Alfa Laval.
Since then, Munters has sold a non-core asset to private equity firm Triton and acquired several companies including Rotem and Reventa, two makers of control systems for farmers.
In a different auction of a European air treatment group, Triton bought Fläkt Woods in June.
(Editing by Tina Bellon and Mark Potter)