Valeo stidied a possible tie-up with Visteon prior to deciding that an all-out merger would carry too much risk, Reuters reported.

According to the news agency, the French parts maker's annual report showed that the board in October 2006 authorised a payment of $US200,000 to board member Yves-Andre Istel for a study into a possible merger between Valeo and Visteon.

A company official told Reuters the study had been finished by then as Valeo was thinking about approaching Visteon last summer but dropped the idea.

The news agency noted that CEO Thierry Morin has since indicated that Valeo would be interested in looking at any assets that Visteon or Delphi may put up for sale, but would not buy the entire company.

Istel, based in New York, resigned from the Valeo board at its Tuesday 10 April meeting, Reuters said, noting that he is a senior adviser of Rothschild, where he was vice chairman after having worked with CSFB and Wasserstein Perella. He had been a Valeo board member for over 12 years.

"The conclusion of the study was that we would not do it," the Valeo official told Reuters.

Separately, Automotive News reported that French private-equity fund, Parisbas Affaires Industrielles, is trying to acquire Valeo as part of a leveraged buyout with Morin.

Parisbas Affaires is offering cash of between EUR40 and EUR44 ($US53.71 to $59.08) per share for Valeo, a source familiar with the offer told Automotive News on Wednesday.

The trade paper added that French business daily Les Echos also reported the offer on Thursday, citing anonymous sources. The bid totals about $4.58bn.

According to Automotive News, the offer provides no significant premium to shareholders. The paper added that, in an announcement after the board meeting, Valeo said it continues to examine "all strategic options and will keep its shareholders informed at the appropriate time of developments on this issue as necessary."

Automotive News said Valeo spokeswoman Kate Philipps declined to comment on the reports of Parisbas Affaires' offer.

Reuters' report said Pardus Capital Management, which recently raised its stake in Valeo to 13.4% and is the biggest single shareholder, is putting pressure on Valeo to link up with Visteon in which Pardus has a 17% stake.

Reuters was unable to obtain comments from PAI, Cerberus or Valeo.