Blackstone, Carlyle in bid for TRW parts unit

From staff and wire reports

The Blackstone Group and the Carlyle Group, two prominent U.S. buy-out funds, have joined forces to bid for TRW Inc.'s automotive parts division.

At about $5 billion in size, the deal would join this past week's $7 billion sale of QwestDex to Carlyle and Welsh Carson as one of the largest buy-out deals of all time.

The sale, which could be completed within the next few weeks, has been mooted many times. But industry rivals have not readily stepped up to buy the business that includes LucasVarity, the former UK component maker.

The unit generated more than half the revenues for the group, but was worth less than half of the company's value, people familiar with TRW said.


TRW has four auto parts plants in Rushford and Winona and across the Wisconsin border in Ettrick and Galesville. About 1,150 workers in those plants make electronics parts, such as heating and air-conditioning controls, and electronic dashboard switches for autos.

The separation of the auto division comes as Northrop Grumman, the U.S. defense contractor, has agreed to buy all of TRW for about $7.5 billion in stock. The No. 2 defense supplier wants TRW for its missile and space electronics unit and said it would sell or spin-off the car parts business.

TRW tried to sell the automotive business, and make other divestitures to stave off Northrop's hostile moves. Those sales were shelved when the board came around to Northrop's bid.

Blackstone and Carlyle might not have an uninterrupted run at the division. Other buy-out firms, including Los Angeles-based Apollo Advisors, are reported to have considered buying the group during the pre-merger auction.

Blackstone and Carlyle plan to finance the deal with $500 million cash each, with the remainder of the price being provided by the bank-loan and high-yield markets. Carlyle's strong defense ties could give it an edge.

TRW's automotive business generates about $900 million of cash flow, so the banks would have provided financing of just more than four times that figure.

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