Valeo, Tata Group in Talks for Stake in Visteon

From AFX News Limited

MUMBAI — French auto parts maker Valeo and India’s Tata Group are said to be in early talks to acquire a stake in New York-listed Visteon Corp, the Business Standard reported, citing sources close to the deal.

Company officials declined to comment on market speculation, the paper said. A stake in the ailing automotive supplier, which was spun off from Ford Motor Co in 2005, would cost $1.5 to $2 billion, the paper added.

Tata AutoComp, an original equipment supplier to major domestic and multinational carmakers, sees the acquisition as a strategic fit and has appointed a merchant banker.

The paper also said the company is awaiting clearance from Visteon to start due diligence.

Valeo is also said to be exploring options, including a leveraged buyout of Visteon, after talks with UK-based auto and aircraft parts maker GKN failed.

Visteon makes electronic items, powertrain controls, engine induction, chassis and lighting for vehicle manufacturers. The company posted a net loss of $153 million on sales of $2.93 billion in the March quarter.

Karim Samii, chairman of 14.2 percent Valeo shareholder Pardus Capital Management, said in an interview in France’s Le Figaro that he believes Valeo’s share price could rise to $80.80, from $54.73 at Friday’s close, if it adopts the strategy Pardus is recommending.

Pardus would target an increase in the operating margin to 6 percent from 3 percent by separating off non-profitable activities and carrying out a better allocation of resources, he said.

Samii’s fund has nominated eight people to be Valeo directors and these will be put to the vote at the company’s AGM this afternoon.

Pardus told Thomson Financial News last week that it wants Valeo to explore all options and it is not single-minded in its view the French company should acquire Visteon’s thermal equipment business

Samii told Le Figaro he would seek final talks with Valeo chairman Thierry Morin before decided whether to vote for his reappointment at the AGM.