February 25, 2014 / 11:20 PM / 6 years ago

Exclusive: Cooper-Standard weighs merger with TI Automotive - sources

NEW YORK (Reuters) - Cooper-Standard Holdings Inc (CPS.N) is weighing a merger with rival TI Automotive, looking to combine the world’s two largest suppliers of fluid systems for cars and trucks, according to people familiar with the matter.

Cooper-Standard is working with financial and legal advisers to evaluate a takeover bid for TI Automotive and recently approached its rival, which has been looking for a buyer in the past several months, the people said.

A deal with TI Automotive, which is about the same size as Cooper-Standard with annual sales of about $3 billion, would be a big bite for Cooper-Standard, which has a market value of just over $750 million and an enterprise value of around $1.4 billion including debt.

Privately-held TI Automotive, meanwhile, is estimated to have an enterprise value of more than $2 billion, people familiar with the matter have previously said.

The companies, both controlled by a group of hedge funds after going through debt restructurings during the financial crisis, have yet to enter merger discussions and there is no guarantee a deal would materialize, the people cautioned.

The people asked not to be named because the matter is not public. Representatives for Cooper-Standard did not respond to requests for comment, while TI Automotive declined to comment.

Cooper-Standard unsuccessfully tried to sell itself in 2011, a year after coming out of bankruptcy under the control of a handful of hedge funds, including Silver Point Capital and Oak Hill Advisors.

Cooper-Standard’s interest also would further complicate an auction process for TI Automotive that has been dragging out due to the complex ownership and disagreements over valuation.

TI Automotive was picked up by a consortium of funds led by Oaktree Capital Group LLC OAK.N and Duquesne Capital Management LLC in a 2007 debt restructuring. Hedge fund veteran Stanley Druckenmiller wound down Duquesne in 2010.

Private equity firms Bain Capital LLC and Pamplona Capital Management LLP both made offers to buy TI Automotive, but the offer prices were below owner expectations, prompting them to look at other options and leaving the auction in limbo, Reuters reported in January.

Cooper-Standard, which was not part of the auction process that had been underway since last summer, made an overture to TI Automotive more recently and indicated that it could pay more than the buyout firms, people familiar with the matter said.

Details about the offer prices could not be learned, but any sale would likely have to value TI Automotive at north of $2 billion, some of the people said.

TI Automotive has been working with Deutsche Bank (DBKGn.DE) and JPMorgan Chase & Co (JPM.N) on a possible sale. Hedge fund owners of TI Automotive separately hired the advisory arm of Blackstone Group LP (BX.N) early this year to evaluate a range of options for the auto parts maker, Reuters reported last month.

Blackstone bankers have since advised the owners that the company should pursue an initial public offering unless potential buyers meet their asking price, people familiar with the matter said.

TI Automotive and Cooper-Standard are the world’s two largest suppliers of systems that control, sense and deliver fluids and vapors in vehicles.

TI Automotive, based in Auburn Hills, Michigan but chartered in Britain, makes fuel tanks as well as braking and powertrain components for cars and trucks and supplies all of the world’s major automakers, according to its website.

Cooper-Standard, based in Novi, Michigan, makes sealing and trim, fuel and brake systems and employees more than 20,000 people in 19 countries, according to its website.

Cooper-Standard was formed in 2004 when New York-based private equity firm the Cypress Group and Goldman Sachs Capital Partners acquired the automotive segment of Cooper Tire & Rubber Co (CTB.N) for nearly $1.2 billion.

The company had grown through several acquisitions, but filed for Chapter 11 bankruptcy protection in 2009 when auto sales plunged to decade lows amid the global recession. It emerged from bankruptcy in May of 2010.

Reporting by Soyoung Kim in New York; Editing by David Gregorio

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