Bain Said Close to Financing of TI Automotive AcquisitionJodi Xu and Mark Clothier
Bain Capital Partners LLC is close to securing debt financing to fund an acquisition of auto-parts maker TI Automotive after the two companies renewed talks following a disagreement over price, people with knowledge of the matter said.
Bain is seeking to line up as much as $1.6 billion in debt for the purchase, said two of the people, who asked not to be named because the process is private. The financing will include a loan and a bridge loan that will eventually be replaced by a high-yield bond offering, one of the people said.
Talks had broken down after Bain submitted a bid close to $2 billion that TI Automotive’s owners considered low, a person familiar with the situation said last month. The companies resumed discussions a couple of weeks ago and are seeking alternatives, said the people with knowledge of the situation. In one possible scenario, Bain would let current owners roll over their stake in the company to potentially capture future upside, two of the people said.
Spokesmen for Bain and TI Automotive declined to comment.
TI, which once supplied fuel lines to Ford Motor Co.’s Model T, has about $400 million in annual earnings before interest, taxes, depreciation and amortization, a person with knowledge of the matter said last month.
A bid of $2 billion is 5 times that Ebitda, compared with a median of 5.8 times Ebitda paid in 17 purchases of North American and Western European autoparts companies in the past five years.
TI generated about $3 billion in revenue last year, with more than one-fourth coming from North America, a spokesman said previously. Chartered in Britain and headquartered in Auburn Hills, Michigan, the company was seeking a price in the mid-$2 billion range, a person said last month.
Bain was among bidders for TI in 2011, in a sale that was scrapped because of worsening financial conditions. The Boston-based firm manages about $70 billion in assets, according to its website. Its investments include Texas-based specialty retailer Michaels Stores Inc. and German auto-parts maker FTE Automotive GmbH.
TI was acquired by a group of hedge funds including Oaktree Capital Group LLC and Duquesne Capital Management LLC in a 2007 debt restructuring. The company hired JPMorgan Chase & Co. and Deutsche Bank AG to run a sale process in August.
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