Exclusive - Tomkins explores potential $7 billion sale -sources

By Soyoung Kim and Greg Roumeliotis

NEW YORK (Reuters) - Tomkins Plc is exploring a sale that could value the private equity-owned global manufacturer of auto parts and building products at as much as $7 billion (£4.31 billion), several people familiar with the matter said on Friday.

Onex Corp (TOR:OCX) and the Canada Pension Plan Investment Board (CPPIB), which acquired Tomkins in 2010 for $5 billion, including the assumption of debt, are interviewing investment banks to advise them on a sale of the company, the people said.

Tomkin's owners may seek to exit the company outright through a sale to another party or float it in the stock market, the people said. A process to explore both possibilities is expected to start in the first quarter of 2014, they added.

The people asked not to be identified as the deliberations are private. A Tomkins spokesman said the company does not respond to market rumours. Representatives of Onex and CPPIB did not immediately respond to requests for comment.

London-based Tomkins has operations in over 30 countries and sells products ranging from power transmission systems to acrylic bathtubs in over 70 countries, according to its website.

It had adjusted 12-month earnings, before, interest, tax, depreciation and amortization of $536 million as of the end of September and net debt of roughly $1.5 billion, according to Onex's third-quarter earnings statement.

The company serves a broad range of sectors including oil and gas, mining, construction, agriculture, transportation, automotive and manufacturing. Its Gates Corp division, which accounts for most of the company's business, is headquartered in Denver, Colorado, and employs over 14,000 people.

Founded in 1925 as a small manufacturer of buckles and fasteners, the company expanded into a multi-industrial conglomerate through a series of deals, which included the 1987 acquisition of gun maker Smith & Wesson (NSQ:SWHC) and the 1996 takeover of U.S.-based Gates Corporation. The Gates deal signalled its move into the industrial and automotive markets.

The company was once one of Britain's largest industrial groups and dubbed the 'buns-to-guns' company in its 1990s heyday because it owned both food group Rank Hovis McDougall and .357 Magnum maker Smith & Wesson.

Onex, CPPIB and Tomkins' management invested $2.2 billion as equity when they took Tomkins private in 2010. In September 2012, CCPIB agreed to acquire Tomkins' air distribution division, which makes products for air-conditioning systems, for about $1.1 billion.

Prior to that divestiture, the company had already sold five other non-core businesses for total proceeds of almost $1 billion, which were used primarily to reduce Tomkins' debt following the leveraged buyout by Onex and CPPIB.

(Reporting by Soyoung Kim and Greg Roumeliotis in New York; Editing by Andrew Hay and Richard Chang)