| NEW YORK, March 18
NEW YORK, March 18 Blackstone Group LP is
working on a higher takeover bid for industrial conglomerate
Gates Global Inc after its previous offer of roughly $5.5
billion was turned down by Gates' owners last week, people
familiar with the matter said on Tuesday.
Blackstone, which submitted its binding offer in
partnership with TPG Capital LP on Wednesday, is in negotiations
with Gates' owners - Onex Corp and the Canada Pension
Plan Investment Board (CPPIB)- about raising its bid to clinch a
deal for the auto parts and building products maker, the people
It remains unclear whether TPG will agree to join Blackstone
in the deal at a higher valuation, one of the people said,
cautioning that the negotiations were ongoing.
While Onex and CPPIB are also weighing an initial public
offering of Gates in a so-called "dual track" process, they are
leaning toward a sale and are working to finalize a purchase
agreement, the people said.
If final terms are agreed, a deal for Gates could come in
the next two weeks, the people said. It would mark the second
largest private equity deal agreed so far this year following
Cerberus Capital Management LP's $9.4 billion merger of its
Albertsons supermarket chain with Safeway Inc, which was
announced earlier this month.
All the people asked not to be identified because the matter
is confidential. Representatives for Blackstone, TPG and CPPIB
declined to comment, while Onex and Gates did not immediately
respond to requests for comment.
Previously known as Tomkins Plc, Gates filed for an IPO in
December, more than three years after it was taken private for
$5 billion in 2010.
Reuters first reported in November, citing people familiar
with the matter, that Onex and CPPIB were seeking to hire banks
to explore both an outright sale of Gates to another company and
a public offering.
Blackstone and TPG were among a few buyout firms that were
shortlisted to bid for Gates, Reuters reported in January. The
two buyout firms later teamed up to pursue a joint bid.
Denver-based Gates has manufacturing operations in 29
countries. It sells products ranging from power transmission
systems to acrylic bathtubs in more than 120 countries.
Gates serves a broad range of sectors, including oil and
gas, mining, construction, agriculture, transportation,
automotive and manufacturing.
The company generated $2.9 billion in sales and $536 million
in adjusted earnings before interest, taxes, depreciation and
amortization in the 12 months ended Sept. 28, according to a
Onex, CPPIB and Tomkins' management invested $2.2 billion as
equity when they took Tomkins private for $5 billion, including
debt. In September 2012, CPPIB agreed to acquire Tomkins' air
distribution division, which makes products for air-conditioning
systems, for about $1.1 billion.