Wilbur Ross's IAC mulls sale along with IPO: sources

Wilbur Ross, chairman and CEO of WL Ross & Co., speaks during the Reuters Restructuring Summit in New York, October 7, 2010.

NEW YORK/FRANKFURT (Reuters) - Representatives of billionaire investor Wilbur Ross have approached several vehicle parts makers to gauge their interest in buying his International Automotive Components Group interiors business, people familiar with the matter said.

One of the companies they approached is auto interior parts maker Faurecia (EPED.PA), these people said.

At the same time, IAC has hired Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N) to work on an initial public offering, two sources told Reuters.

The sources requested anonymity because they were not authorized to speak to the media and the process is private.

Faurecia declined to comment. Ross said he would not comment on rumors, citing a long-held policy against addressing speculation about IAC.

IAC would be among many potential sellers pursuing both an IPO and a sale in what is known as a "dual-track process." An IPO filing often prompts potential acquirers to express interest about a possible M&A deal.

Ross has built IAC into a major auto supplier since 2006 by combining the business of the former Collins & Aikman and the interiors business of Lear Corp (LEA.N), and through a string of acquisitions.

The company makes auto interior parts such as door and trim systems, instrument panels, floors and headliner systems. Its major competitors include Johnson Controls (JCI.N), Magna International (MG.TO), Faurecia and Visteon Corp VSTO.OB.

Earlier this month, Ross told Reuters he was planning more expansion for the auto supplier business and had no plans to exit the industry.

But people familiar with the process say IAC has pursued both planning for an IPO and a quiet outreach to potential strategic buyers, including France's Faurecia.

Faurecia, the sixth-largest auto supplier by revenue, has focused on investment in areas like supplying lighter-weight materials that promise to improve fuel economy and on building up its offering of emissions control technology.

IAC likely will draw limited interest from other companies, several sources said. Still, the IPO process could prompt buyers to register their interest because once public, the company would be more expensive to take out, they said.

Faurecia might be interested, but not overly so, one source said. Chinese companies might also be potential acquirers, several people close to the process said.

No numbers are available for the privately held business, but it could be worth around $1.6 billion based on estimated revenue and margins, one source said. Another source said it would be less than $2 billion.

A sale or IPO would come as the global auto industry continues a recovery that began last year. U.S. auto sales will rise 12 percent to about 12.9 million vehicles in 2011, according to industry forecaster J.D. Power & Associates.

IAC was not profitable on revenue of $3.2 billion in 2009 when the auto industry approached collapse. Ross told Reuters last year that he expected the business to turn profitable in 2010.

The company, which employs about 23,000 people, has just completed a merger of its own operations in North America, Europe, Japan, China and India.

Earlier this month, IAC also acquired the auto supply operations of Delhi-based Multivac India, an interior supplier in the Indian car market to Volkswagen, Maruti Suzuki and Mahindra & Mahindra.

INTEREST FROM CHINA?

Volatile oil prices could make IAC a tough sell for public investors, people familiar with the company's operations said, because the company's car interior business is not related to the areas of technology like fuel economy and electronics that are expected to grow faster than auto sales as a whole.

"It's going to be tough for them to make an argument that the business is going to grow faster than auto builds itself," one of the sources said.

"If you are an investor, why would you buy shares in that when you can buy something like BorgWarner (BWA.N) and easily make an argument that they are going to be growing faster than the market itself," that source said.

BorgWarner makes turbochargers and transmission parts that make vehicles more fuel efficient.

Still, IAC's business could attract bidders from China seeking to tap the booming auto market there, now the world's largest, the sources said.

In November, a Chinese investment group backed by Beijing's municipal government -- Pacific Century Motors -- completed a $450 million deal to buy Michigan-based auto steering supplier Nexteer Automotive from General Motors Co (GM.N).

(Reporting by Soyoung Kim in New York and Philipp Halstrick in Frankfurt. Additional reporting by Kevin Krolicki and Bernie Woodall in Detroit. Editing by Lisa Von Ahn, Robert MacMillan and Tim Dobbyn)