DETROIT — Textron Inc. has retained investment bankers for its automotive division, part of which could be put on the block.
The Providence, R.I., conglomerate has retained investment banks Rothschild Inc. and Goldman, Sachs & Co. for its Troy, Mich.-based Textron Automotive Co. Inc., according to two sources familiar with the deal.
Textron Inc. Chairman Lewis Campbell wants to cut the parent company's exposure to the automotive sector. He told analysts in a Jan. 23 conference call that he would achieve that either by selling a portion of his auto business or by growing Textron through nonautomotive acquisitions.
Textron spokesman Tim Weir would neither confirm nor deny a sale. But Campbell is focusing on selling part of his automotive division, which represented 22 percent of Textron Inc.'s sales last year, according to investment bankers and a former Textron executive.
The likely sale candidate is the Textron Automotive Trim division, which generated 63 percent of the automotive division's $2.9 billion in sales last year. The plastics processor is a global supplier of instrument panels, cockpit modules, exterior and interior trim and other parts, most of them injection molded.
Textron Automotive was hard-hit by DaimlerChrysler's demand earlier this year for an immediate 5 percent price reduction. Textron Automotive's estimated tab: $64 million.
"The bottom line," said analyst Eric Goldstein of Brahman Partners in New York, "is that conglomerates have more choices about where to spend their free cash flow than do pure-play automotive suppliers."
Selling all of Textron Automotive would fetch as much as $1.2 billion, said Jeff Sands, managing director of Raymond James Automotive Investment Banking in Detroit. Conditions are not ideal for a sale, he said, because the financing market has tightened so that it is limiting the prices that can be paid.
Sands said French auto-parts supplier Faurecia might be interested. Textron would give Faurecia a substantial North American manufacturing capacity and customer base. Faurecia in January acquired Sommer-Allibert SA, a supplier of interiors except seats.
Other possible strategic bidders include Johnson Controls Inc. and Lear Corp. Financial bidders could include the Blackstone Group and Heartland Industrial Partners Inc., a consolidator of Tier 2 automotive suppliers that last month acquired a controlling interest in interior trim supplier Collins & Aikman Corp.
Textron Automotive has about a 10 percent share of the worldwide instrument panel business. It also has a 23 percent share of the world's market for plastic fuel tanks through its Kawtex Textron unit. A third business, CWC Textron, manufacturers engine cam and balance shafts.