Dura eyes suppliers, sees consolidation

Dura Automotive Systems Inc. President and CEO Tim Leuliette talks during the Reuters Autos Summit in Detroit, Michigan November 3, 2009.

DETROIT (Reuters) - Dura Automotive Systems Inc is looking at acquiring the assets of an Asian and a European auto parts supplier and will consider more opportunities as supplier valuations become cheaper, its chief executive told Reuters on Tuesday.

Speaking at the Reuters Autos Summit in Detroit, Tim Leuliette said the auto parts supply industry is severely distressed, adding that about 200 U.S. suppliers are going through quiet liquidation processes in which they are slowly selling assets to other suppliers or private equity companies.

"Those liquidations are occurring in a quiet way," Leuliette said. "We are seeing this more quiet, more cost-effective transition than a bankruptcy proceeding," he said. Such processes are also less disruptive to automakers than bankruptcy filings, Leuliette said.

Hurt by weak auto sales and squeezed by demands for lower prices by automakers, many parts suppliers have been struggling. Analysts and executives had expected to see a wave of consolidation and liquidations in 2009, but many suppliers were protected when the U.S. government bailed out General Motors Co GM.UL and Chrysler earlier this year.

Auto sales have been hurt in the past year as customers tightened purse strings amid a weak economy. The economic meltdown came on the heels of already-weakening vehicle demand amid record-high gasoline prices last year, creating excess capacity in the supply base.

ASSETS AVAILABLE

Leuliette said Dura is planning for a double-dip recession in the United States and forecast annualized sales of 9 million to 10.5 million units for 2010, slightly more pessimistic than some forecasts of above 11 million units. "If the market does even on the upside of what people think, there are going to be assets available," he said.

"We are a buyer in this market because we're paying with 8 cents (on the) dollar or 12 cent (on the) dollar," Leuliette said, adding that he expects more consolidation next year as valuations drop even further.

At the summit, Leuliette told Reuters Television Dura's two acquisitions, likely to close next year, would reflect $400 million to $500 million in revenue. "They'd reflect ... assets in our core segments, and it would give us a more balanced geographical footprint," he said.

Leuliette said the supplier would continue looking at opportunities next year, with a focus on growing in Asia.

He also said he did not expect vehicle sales to improve in Europe. "Uniformly, we do not expect Europe to get better ... we will see anywhere between a 2 and 6 percent decline next year," he said. "So I think you'll see opportunities in Europe."

(Reporting by Jui Chakravorty Das; editing by Matthew Lewis)