German car parts maker Eberspaecher attracts bids for $1 billion exhaust business -sources

By Arno Schuetze and Alexander Hübner

FRANKFURT (Reuters) - Family-owned German car parts maker Eberspaecher has attracted interest from private equity groups and industry players for its exhaust business in a deal that may value the unit at more than 1 billion euros (£725.6 million), people familiar with the matter said.

Eberspaecher is set to receive bids for a majority stake in the business next week, one of the sources said, while it will hold on to its heating and air conditioning business.

Buyout groups such as Triton, PAI Partners, KPS and 3i (III.L) are expected to hand in offers for the unit, they added.

Exhaust specialists like U.S.-based Tenneco (TEN.N) and France's Faurecia (EPED.PA) are also looking at the issue but the two companies are unlikely to submit bids, they said.

Tenneco could find it hard to increase its market share in the exhaust business segment due to antitrust scrutiny while Faurecia would mainly consider a break-up deal for part of the Eberspaecher exhaust business, one of the sources said.

Eberspaecher, Germany's 10th biggest car parts maker, supplies parts to Daimler (DAIGn.DE), BMW (BMWG.DE) and Volkswagen (VOWG_p.DE) and is benefiting from the latter's emmissions scandal as demand for state-of-the-art exhaust technology has increased of late.

Spokesmen at Eberspaecher, Tenneco and Triton declined to comment. Faurecia, KPS, PAI Partners and 3i were not immediately available for comment.

Based in Esslingen in southern Germany, Eberspaecher's exhaust unit could be valued at between 900 million euros and 1.2 billion euros, representing a multiple of between five and seven times its expected earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 180 million euros in 2015.

The company had core earnings of 130 million euros last year.

Its peers trade at a multiple of about five times their expected core earnings, a level that potential buyers are willing to offer, while the family owners are hoping for a valuation of up to seven times, the people said.

In the aftermath of the global financial crisis, Eberspaecher's sales slumped 40 percent in 2009. But it has rebounded although ongoing expenses to restructure, in particular the Exhaust Technology division, have weighed on profit.

Eberspaecher, which has 8,400 employees and in its fiscal2014 generated 3.6 billion euros in sales, has cut jobs in Sweden and Germany to offset a slump in demand in Europe. It has also overhauled its commercial vehicle exhaust business to help truckmakers meet the mandatory Euro 6 emissions standard.

(Additional reporting By Pamela Barbaglia; Editing by Keith Weir)