NEW YORK (Reuters) - Private equity firm Carlyle Group (CG.O) is seeking a buyer for the automotive operations of diversified industrial manufacturer Sequa Corp, which it took private for $2.7 billion in 2007, according to several people familiar with the matter.
The divestiture of the lower-margin auto businesses would position Sequa, which makes aircraft and auto parts, as a more streamlined aerospace company and could help the rest of the company trade at a higher valuation in a potential initial public offering, the sources said over the past week.
The units up for sale include Sequa’s ARC Automotive subsidiary, which makes advanced inflators for driver- and passenger-side airbags, the sources said. The products are used by Ford Motor Co (F.N), General Motors Co (GM.N), Hyundai Motor Co (005380.KS) and Volkswagen AG (VOWG_p.DE) among others, according to the company’s website.
The sources said that another unit for sale is Casco Products, which makes cigarette lighters, power outlets, and electronic sensors for vehicles.
These units combined would fetch between $500 million and $1 billion, according to some of the sources, who asked not to be named because the process is not public. Carlyle declined to comment.
Sequa is keeping its largest business unit, Chromalloy, which provides aftermarket services and advanced repairs for jet engine parts, as well as Precoat Metals, which makes decorative and protective coatings for construction projects, the sources said.
Carlyle acquired Sequa at a 54 percent premium to the company’s stock market price in July 2007, before the buyout boom collapsed, and has struggled to de-leverage the company.
Sequa’s automotive assets are among several assets that have gone on the auction block in the industry in recent months.
Private equity firm KPS Capital Partners is seeking a buyer for HHI Group Holdings, which makes forged parts, wheel bearings, powdered metal engine and transmission components for automotive and industrial customers, according to the sources.
KPS has hired Goldman Sachs Group (GS.N) to sell the portfolio company and is hoping to fetch as much as $900 million, the sources said. Representatives of KPS declined to comment.
In April, sources told Reuters that Carlyle was looking to sell auto parts supplier Metaldyne, hoping to fetch as much as $1 billion.
Reporting by Soyoung Kim