Pool of potential bidders for Federal-Mogul shrinks, report says

ERJ staff report (AN)

New York (Reuters) - Private equity firms Carlyle Group and Apollo Global Management are no longer interested in Federal-Mogul Corp., several sources familiar with the situation said on Tuesday, shrinking the field of potential bidders for the auto parts company.

Private equity firms have found it difficult to strike deals in the past several months. While debt markets have recovered, allowing them to borrow for large transactions, valuations of assets they are targeting have increased.

Carlyle and Apollo are the latest private equity bidders to drop out of the bidding for Federal Mogul, which has a market capitalisation of about $2.3 billion (euro 1617 million).

Several buyout firms including Bain Capital, Blackstone Group and Canada's Onex were initially interested in the company, but later lost interest, sources said in April.

Those sources said at the time that Apollo and Carlyle remained interested in Federal-Mogul, but said a run-up in the company's share price had made suitors skittish.

Apollo has now lost interest, one source familiar with the situation told Reuters. Carlyle has also lost interest, two separate sources told Reuters.

However, a fourth source familiar with the matter said on Tuesday that the auction process is not over for Federal-Mogul and some interest remains in the company.

Federal-Mogul, majority-owned by billionaire investor Carl Icahn, is now trading at around the same price prior to when Reuters first reported the company was considering a sale. Its shares fell 5 percent on Tuesday to $23.95.

The company's shares had risen as much as 17 percent in the weeks following 4 March, the last trading day before Reuters reported it was exploring a sale.

Federal-Mogul later confirmed that it had retained Lazard Ltd to evaluate strategic alternatives.

Apollo and Carlyle declined comment. Federal-Mogul could not be reached for comment.

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Article from Automotive News (a Crain publication)