Apollo Makes Competing Bid For TRW’s Auto Unit –

The auction for the auto parts division of TRW Inc. just got more crowded. According to a source familiar with the bid, Apollo Management has teamed up with auto parts maker ArvinMeritor Inc. to make a $4.5 billion offer for the unit.

The Blackstone Group and The Carlyle Group made a $5 billion offer in September. Blackstone and Carlyle have reportedly lowering its initial bid by $500 million.

Despite the added competition, a source close to Blackstone insisted that Apollo’s presence will not dissuade TRW from selling to the original bidders. “There is no bidding war,” he said. “The only question is when [the deal will close].”

None of the aforementioned companies agreed to comment on the situation.

Regarding the auto parts sector, Carlyle is the most experienced buyout firm mentioned in the TRW bidding. The firm currently lists five auto parts companies in its portfolio Meschede, Germany-based Honsel-Werke AG, acquired in April 1999 for _525 million; Amcan Consolidated Technologies, headquartered in Hamilton, Ontario, and purchased in March 2000 for $400 million; Beru AG, another German auto parts maker, located in Ludwigsburg and acquired in 2000 for _250 million; Highland Park, Ill.-based Grand Vehicle Works, acquired in May 2000 for $285 million; and Key Plastics, the latest add-on to the auto parts platform, which cost Carlyle $563 million in April 2001.

Carlyle also made a $1.2 billion bid in February to acquire an 80% stake in Korean tire maker Kumho Industrial Company.

Blackstone also has some experience in the auto parts sector. In 1988, Blackstone acquired Collins & Aikman, and the auto parts maker remained in the Blackstone portfolio for 13 years before being sold to Heartland Industrial Partners for a reported $260 million. According to a Blackstone spokesman, Blackstone’s only other auto parts acquisition occurred in October 1997, when the firm purchased American Axle and Manufacturing for $928 million.

While Apollo, through a spokesman, said it has acquired auto parts manufacturing companies, and its current portfolio contains at least one auto parts maker, the buyout firm refused to disclose any specific information.

In May, Apollo announced the close of its $3.8 billion fund (See Buyouts, 5/7/02). Apollo refused to give financial details regarding its fund, but a portion of that fund may already be earmarked for a $500 million deal with U.S. Steel (see related story on page 9). This July, Blackstone closed its $6.45 billion Blackstone Capital Partners Fund IV, the largest private equity fund ever raised. According to a source at Blackstone, while over 95% of Blackstone’s Fund III has been spent, Fund IV is untouched to date. Carlyle has approximately $2.73 billion remaining in their coffers from its third fund, which closed in December 2000 with $3.9 billion in capital (See Buyouts 10/21/02).

As reported earlier (See Buyouts 9/9/02), Northrop Grumman Corp. offered $7.2 billion for TRW Inc., provided the company unloads its debt-laden auto parts unit. The U.S. Department of Justice (DOJ) antitrust team is currently reviewing that proposed deal, as government officials consider that a merger of the two largest domestic suppliers of aerospace and defense equipment may constitute a monopoly. According to a source at DOJ, the U.S government hopes to make a decision soon regarding antitrust issues surrounding this proposed merger, while the European commission has already voiced its approval.

On Dec. 11, Northrop Grumman and TRW shareholders will vote on Northrop’s proposed offer.