Delphi has chosen investment group Platinium Equity as lead bidder for its global steering and half-shaft business.
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The one-time GM-owned components maker announced lat March it would explore a sale of the global steering business as part of its restructuring plan.
According to a statement from John Arle, Delphi vice president of treasury, mergers and acquisitions, “Delphi intends to finalise negotiations with Platinum Equity and, upon successful completion of a master sale and purchase agreement, to submit Platinum Equity as the lead bidder in a bankruptcy court section 363 sale process.”
However, details of the negotiations between the two parties will not be revealed until the master sale agreement is filed in bankruptcy court, Delphi said.
Delphi vice president and Delphi Steering president Robert Remenar said: “Platinum Equity is a global acquisition firm with a reputation for solving problems and creating value in complex situations. Platinum’s team has an impressive record of acquiring portions of larger corporations and turning them into stand-alone businesses that are positioned for long-term success. They have indicated that they intend to focus on business continuity and growth as critical measures of a successful transition.”
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By GlobalDataPartner and president of portfolio operations at Platinum Equity, Phil Norment, who is responsible for evaluating target acquisitions, said the firm is enthusiastic about the steering unit and anxious to work with its management team.
“We believe that Platinum’s solutions-based approach to transition and operations is well-suited to establishing Delphi Steering as a successful stand-alone company,” he said.
Both Norment and Remenar noted the need for the steering business to address certain fundamental issues. They jointly recognise the key challenges, which include ensuring that the steering and half-shaft business has global capacity in line with customers’ demands, accelerating overall cost reduction to improve the long-term health and stability of the business, and continuing to fund product and technology development.
In the US, Platinum and Steering management have already engaged in preliminary discussions with UAW leadership. By working with Delphi’s key stakeholders, Remenar and Norment said they will seek joint solutions to the competitive challenges that will support a continued business presence in the United States.
“Both Platinum Equity and Delphi are committed to completing our discussions with key stakeholders as soon as possible,” Remenar said. “Delphi Steering is gaining tremendous momentum in the marketplace. We are securing new global business at record levels and attracting new customers. For the benefit of the business – and all who are associated with it – we are focused on moving through the sale process as quickly and efficiently as possible.”
In 2006, the steering division achieved global business bookings of more than $US3.4bn, which is the second highest in the division’s 100-year history. In 2005, the division had global sales revenues of more than $2.6bn.
According to Automotive News, revenue at Delphi, which hopes to emerge from US chapter 11 bankruptcy protection this year, continued to fall in December.
A group led by Cerberus Capital Management and Appaloosa Management has offered $3.4bn for the company but the bid is conditional on concessions by Delphi’s labour unions.
