CANADA/UK - The Canada Pension Plan Investment Board and Onex, Canada's biggest publicly traded buyout firm, are examining Tomkins' accounts after signalling they may bid about £2.9bn ($4.4bn) for the British maker of auto parts and window frames.
The two investors outlined a 325 pence-a-share cash bid for Tomkins while reserving the right to lower the offer, the London-based company said today in a statement issued with the consent of its suitors.
Due diligence "is now at an advanced stage," Tomkins said. Onex chief executive officer Gerald Schwartz said in May that attractively priced businesses and a rebound in credit markets would help stimulate large acquisitions.
Buying Tomkins, which has reported losses the last two years, would add building products, valves and auto parts to Onex's investments.
The buyout firm had about $1bn in cash and about $3.9bn in third-party acquisition funds as of May 5, it said in a previous statement.
The British company predicted a dip in sales and profitability in the second of 2010 following signs of weakness in global economies. The market for replacement car parts is expected to be flat in the remainder of the year compared with a year earlier, yet it will shrink by below 10% from the first half of 2010, Tomkins said.
Sales volumes through June gained about 23% from a year earlier as carmakers restocked inventories depleted during the financial crisis. That helped offset continued declines in the U.S. construction industry.
JPMorgan Cazenove is advising Tomkins.
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