Exclusive: New Zealand billionaire mulls shedding U.S. auto assets - sources

NEW YORK Thu Jun 26, 2014 5:24pm EDT

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NEW YORK (Reuters) - Graeme Hart, whose packaging conglomerate made him New Zealand's richest man, is in the early stage of exploring options for his U.S. auto parts businesses, which he acquired for nearly $2 billion in 2011, according to people familiar with the matter.

A potential sale of the U.S. vehicle replacement parts providers underscores Hart's efforts to pay down debt accumulated through the buyouts in the last few years that built his industrial empire, Rank Group Ltd.

Reuters reported last month that Hart's investment company Rank Group is also exploring a sale of SIG Combibloc Group Ltd that could value the world's second largest maker of drink cartons at around $5 billion.

Rank has spoken to investment banks in recent weeks about potentially selling two automotive aftermarket companies, UCI International Ltd and FRAM Group Holdings Inc, the people said this week, asking not to be identified because the deliberations are private.

Rank acquired UCI for $980 million from private equity firm Carlyle Group LP (CG.O) in 2011, and FRAM Group, the former automotive consumer products business of Honeywell International Inc (HON.N), for $950 million the same year.

The discussions are at an early stage and no final decision has been made on whether Rank will try to sell both companies, the people added.

UCI Chief Executive Bruce Zorich declined to comment when contacted by telephone, while Rank and FRAM representatives did not respond to requests for comment.

The companies may attract interest from some of their peers as falling prices and lower profit margins have increased consolidation in the highly fragmented car parts aftermarket. Private equity firms also have invested in the sector before.

UCI supplies a range of filtration products, fuel delivery systems and vehicle electronics products for the automotive aftermarket. Its brands include Airtex, Wells, ASC and Champ.

The Lake Forest, Illinois-based company had earnings before interest, tax, depreciation and amortization of $89 million in 2013, down from $129.2 million in 2012, according to its financial statements.

FRAM, also headquartered in Lake Forest, manufactures oil, air and fuel filters. Its brands include FRAM, Prestone and Autolite. It does not publicly disclose its earnings.

UCI and FRAM are separate legal entities but are operated by a common senior management team.

Moody's Investors Services Inc said in January that UCI had found it difficult to capitalize on its cost sharing and manufacturing arrangements with FRAM sufficiently to offset the deterioration in the automotive aftermarket, which has seen more consumers opt for new cars.

Hart, a former tow-truck driver, became a billionaire thanks to his debt-fueled acquisitions of industrial companies, mostly in the packaging sector. The 59-year-old has a net worth of $7.1 billion, according to Forbes.

(Reporting by Soyoung Kim and Greg Roumeliotis in New York; Editing by Jonathan Oatis)

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