A power struggle for control of French supplier Valeo is emerging as the company’s share price rises to its highest level in five years.
Hedge fund Pardus, increased its stake in Valeo from over 10% to 12.25% yesterday (Thursday 22 March). Pardus has been trying to persuade Valeo to acquire Visteon. Pardus owns a 17.2% stake in Visteon. Although Valeo has resisted this, it is open to acquiring some Visteon assets, according to Automotive News Europe. By increasing its stake Pardus now has 12.05% voting rights in Valeo, according to the newspaper.
Separately it has been reported that US investment fund, Apollo, is considering mounting a bid for the company. A Valeo shareholder, Guy Wyser-Pratt has told a French newspaper that Valeo is working with US investment bank, Merryll Lynch to find a buyer for the company.
Wyser-Pratt started investing in Valeo in January and now owns 2.4% of the shares. He has reportedly said that if Valeo does try to acquire Visteon he would oppose this.
According to the German press agency, the struggle is about whether Valeo should sell off some of its subsidiaries and focus on the more lucrative sectors in which it operates, or whether it should expand its market position by taking over Visteon.
In an interview with just-auto yesterday, Sarwant Singh, a partner with consultants Frost & Sullivan, said that there would be further global consolidation in the supplier industry and that more Tier 0.5 companies will emerge, supplying much bigger parts of the car, such as a complete chassis or a complete interior.
“A lot of the capability will be around electronics,” said Singh. “Smaller suppliers will struggle.”
Valeo appears to be at a tipping point – between chosing to become a Tier 0.5 supplier, or a more specialist supplier.