The receiver for south German supplier Peguform has finally found a buyer, more than two years after the plastics and interior and exterior trim supplier was declared bankrupt reports

US private equity investor Cerberus has agreed to acquire the company for an undisclosed sum. The official receiver, Jobst Wellensiek, had been in exclusive negotiations with Cerberus since July, and had originally expected to close the deal by August.

But the US group, which specialises in turnaround situations, demanded major changes at the supplier before finalising the agreement. The latest round of savings sees a cut of 330 in the 5,500 employees of the €1.4bn turnover supplier.

The works council has also agreed to more flexible working hours and wage reductions that will save an annual €40m. The works councils said that in return Cerberus has given a guarantee of employment for the next five years.

In the last few months Peguform has already had to cut into its workforce as a result of the ending of contracts. Earlier in the year it announced the closure of its Luton plant in the UK, and a few months ago it followed with the sale of its Rastatt facility.

Peguform had lost the contract for the rear door module for the Mercedes A-class when the successor model was introduced, and Mercedes Benz switched from plastic to steel. Peguform has also lost a bumper contract for the Porsche Boxster with the model changeover. 

Analysts suggest that the contract losses reflect the uncertainty about the group's future despite the support by German OEMs DaimlerChrysler, Volkswagen, BMW and Porsche in extending credit to the group when it first declared bankruptcy.

Flex-N-Gate acquisition of Dynamit Nobel still unresolved
In contrast the trade acquisition of mg technologies subsidiary Dynamit Nobel by Flex-N-Gate, which was announced in May 2004 and expected to be closed in the third quarter, is subject to legal proceedings by mg technologies.

Flex-N-Gate withdrew from the planned acquisition after financial differences, according to sources close the deal. "Flex-N-Gate has failed to meet its obligations under the sale and purchase agreement despite the fact that the deadline has twice been extended until September 15, 2004," an mg technologies statement said in September. "mg will take the necessary legal action against Flex-N-Gate because the latter has failed to honour its contractual obligations," the company said.

Private equity still playing a dominant role Cerberus' acquisition of Peguform is part of a continuing pattern of evolvement in small and medium supplier acquisitions by financial investors. Cerberus won the deal despite early interest by a number of trade buyers, including a Chinese group.

Klaus Pflum, head of global automotive at Deutsche Bank said that everyone thought that there would be more strategic deals in 2004, as a wave of private equity sponsored deals from a few years ago come back to the market for investors to realise profits.

But "instead of selling to strategic buyers, they are very often sold on to other private equity funds," said Pflum.

Pflum says the influence of the private equity groups is partly driven by the availability of debt financing such deals, and partly by the focus of the strategic trade buyers on limited technology-related acquisitions.

Technology is much more important even than access to customers in driving acquisitions by suppliers, says Pflum.