Heartland Industrial Partners is in negotiations with Textron Inc. to buy at least part of Textron Automotive Co. and mate its expertise with Collins & Aikman Corp. to create an automotive supplier that could provide nearly all of a vehicle interior.
Sources familiar with the talks say Heartland - which purchased 60 percent of Collins & Aikman earlier this year - is the prime suitor for Textron Automotive, including its injection molding-intensive Automotive Trim unit, which racked up $1.5 billion in sales last year, topping Plastics News' ranking of North American injection molders.
Officials for both Textron Automotive and Collins & Aikman declined to comment, calling discussions about the negotiations ``speculation.''
Lewis Campbell, Textron Inc. chief executive officer, sparked discussions on a possible buyer for all or part of the automotive unit early this year, when he said the Providence, R.I.-based corporation wanted to lighten its dependence on the auto industry by either disposing of assets or expanding sales in other businesses.
At about the same time, Heartland - an investment company headed up by David Stockman - bought a majority share in Collins & Aikman. Those dollars freed capital for new acquisitions to help the Troy, Mich.-based supplier grow.
The company already has announced two planned purchases, injection molder Becker Group LLC and the automotive fabric unit of Joan Fabrics.
C&A executives also are stressing their long-term goals for the company, to create a ``mega Tier 2'' automotive supplier that can produce nearly every piece of a vehicle interior.
``What we mean by mega Tier 2 is not just a big Tier 2 supplier,'' C&A Chief Executive Officer Tom Evans said during an April conference call with stock analysts. ``What we're really talking about trying to establish is enough scale in the interior products that we manufacture to - in kind of a horizontal stance ... - be a low-cost producer ... and have enough of a sales base to afford the vertical, technical investments that are required to be a leader in acoustics or fabric design or whatever we choose to put in the portfolio.
``In essence, we become a major prime contractor ... to serve the [interior] integrators, whoever they may be.''
But while Collins & Aikman has expertise in a variety of interior components, including floor mats and molded carpet, it needs more manufacturing to become a full-service supplier, consultants said.
``Collins & Aikman, as it stands right now, lacks instrument panel production,'' said Mitra O'Malley, principal with ITB Group Ltd. of Novi, Mich. ``Being able to get Textron would get them this.''
Textron Automotive is the biggest producer of instrument panels in North America and ranks as the third-biggest producer of cockpits in Europe. It also has a top reputation to match those sales, with expertise in a variety of materials and production methods.
``Textron is one of the higher-quality suppliers in the industry,'' noted Scott Upham, president of Ann Arbor, Mich.-based Providata Automotive.
But Textron Inc. is dealing with shareholders who want a big return on their investments, which the auto industry is not providing now, O'Malley said.
``Acquiring Textron would give Collins & Aikman a very interesting position in the marketplace,'' she said.
While Collins & Aikman's stock is publicly traded, majority control is maintained by Heartland, which is looking to put more money into the industry, making it less vulnerable to the ebb and flow of Wall Street.
The purchase would not be easy, though. Textron Automotive is bigger than C&A, with global sales of $2.9 billion last year, compared with C&A's $1.9 billion.
Evans noted the difficulties during his call with analysts, although he did not specify any potential purchase targets.
``I think the key when you buy a larger company is, hopefully you're buying a company that's filled with good people as well,'' he said. ``You develop your integration teams mutually between yourself and what you acquire so you're not doing it all by yourself. The risks are much higher when you buy a problem asset of that size. You've got to really pour all of your talent into it to make it go.
``So I think you would find that if we did something at that level, we'd be leaning toward the very high-end asset.''