KKR readies German auto parts maker Tekfor for September sale

KKR is evaluating its strategic options for the Offenburg-based company and could launch an auction as early as in September, the sources said.

Macquarie is advising on the potential sale, which could involve up to 100% of the company’s shares, they said.

Information memoranda are expected to be sent out from mid-September, with indicative bids slated to be collected around late September and early October, the sources said.

The vendor is expected to target financial investors as well as industry players such as suppliers to original equipment manufacturers (OEMs) or components makers for other Tier-1 suppliers, the first source said.

Tekfor generates around EUR 280m-285m sales and close to EUR 40m EBITDA on a last-twelve-months (LTM) basis, the sources said.

Its financials on an LTM-basis should improve in the coming months, as sales were still somewhat impacted by the coronavirus crisis in June 2020 and recovered from September onwards, the first source said.

The company reported revenue from contracts with customers of around EUR 295m and EUR 16.3m EBITDA in the financial year ended 30 June 2020, according to its most recently available filings.

Beginning in June 2020, sales had “gradually recovered to near pre-pandemic levels”, and Tekfor expected a “significant” increase in sales, EBITDA and normalized EBITDA for the following year, the filings state.

The company has also booked “significant” new business generating peak annual sales of more than EUR 100m, the sources said. It had 2,176 employees as of 28 June 2020, according to the filings.

KKR Credit acquired Tekfor in 2018 after its then-owner Amtek Auto, an India-based automotive supplier, filed for insolvency. In 2014, the New York-based sponsor had lent Amtek a flexible credit facility of EUR 235m.

KKR attempted to exit Tekfor around two years ago in a sale process that was ultimately inconclusive, the sources said.

Since then, the company has sold its EUR 100m-revenue, cashflow negative Italian subsidiary PrimoTECS – which put off potential bidders at the time – and repositioned itself more strongly towards electric vehicles, the sources said.

Munich-based turnaround investor Mutares acquired PrimoTECS in late 2019 for an undisclosed sum. Amtek initially acquired Tekfor from Equistone in 2013 for an estimated deal value of EUR 156.6m, according to Mergermarket data.

In addition to preparing for new types of propulsion systems, Tekfor “significantly” adjusted its cost base last year and did not require external liquidity in 2020 to navigate the coronavirus crisis despite a temporary drop in sales, the sources said.

Tekfor manufactures automotive components for combustion engine, hybrid and electric vehicles such as engine parts like cam lobes or camshafts, transmission components such as speed gears and shafts, fasteners, stabilizer bars or driveline components such as gear wheels, according to its website.

Sales to OEMs account for roughly half of Tekfor’s revenue, with the remainder largely coming from sales to other Tier-1 suppliers, the first source said. It currently generates around 75% of sales in Europe and 25% in the Americas, with new business expected to increase its share of turnover in the Americas in the coming years, the source added.

Its competitors include fellow automotive suppliers such as Germany-based Hirschvogel, which focuses on steel and aluminium forging and long shafts; ThyssenKrupp’s camshaft and steering subsidiary Presta; and Japanese auto components maker Musashi Seimitsu, one of the sources said.

Macquarie, KKR and Tekfor declined to comment.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Exits
• DACH
• Industrials
• KKR