Loss-making Indian car parts maker Amtek Auto is looking to sell its German unit Tekfor, a business with sales of more than 500 million euros ($554 million), two people familiar with the matter said.
Amtek, which is on a drive to cut debt, has appointed Morgan Stanley to organise the sale of the maker of driveline components formerly known as Neumayer Tekfor, just two years after buying it out of an insolvency, the sources said.
Amtek was not immediately available for comment and Morgan Stanley declined to comment.
Shares in Amtek almost doubled in a day last month after the company said it may sell stakes in overseas businesses to cut its debt.
In August the shares had slumped amid reports of liquidity issues at the company.
While precise earnings figures are not available and information packages have not yet gone out to potential bidders, one of the sources said his estimate for Tekfor’s annual earnings before interest, taxes, depreciation and amortisation (EBITDA) was about 100 million euros.
Amtek is hoping Tekfor will fetch six to seven times core earnings, in line with that of listed peers, the source said.
While strategic bidders are scarce, US-based private equity firm Gores – which competed against Amtek in the 2013 auction of Tekfor – may again show interest, the sources said.
Gores recently put its own German car-parts maker Hay up for sale in a potential 400 million-euro deal, but has now halted that auction as it considers a potential merger of Hay and Tekfor, the people said.
Germany’s auto components suppliers have seen a wave of merger and acquisition deals over the last year as the industry’s leaders seek to expand their product portfolios, driving up valuations.
In recent months in Germany, Mann + Hummel bought US peer Affinia, Canada’s Magna bought Getrag and Mahle bought US-based Delphi’s air-conditioning unit.
Neumayer Tekfor was founded in 1942 and was involved in several mergers before being bought up by Barclays Private Equity, now Equistone, in 2005. It had two joint ventures with Amtek before going into administration in 2012.