Tatas in talks for stake in Visteon

An acquisition by Tata AutoComp may cost $1.5-2 bn.

Tata AutoComp Systems (Taco) and French auto parts maker Valeo are believed to be in preliminary stages of discussions to acquire a stake in NYSE-listed ailing automotive supplier Visteon Corporation.

Sources close to the development said the acquisition of a stake in Visteon, which was spun off from Ford Motor Company in 2000, would cost $1.5-2 billion.

For Taco, a 12-year-old company that is an original equipment supplier to major domestic and multinational car-makers, the acquisition has a strategic fit with its operations. The company has appointed a merchant banker and is awaiting clearance from Visteon to start due diligence.

Valeo is also exploring all options, including a leveraged buyout of Visteon.

When contacted, a Tata group spokesperson said, "As a matter of policy, Taco would not like to comment on any market speculation or rumour". In an e-mail reply, Visteon officials also said, "We do not comment on rumours or speculation".

Earlier, GKN, a UK-based auto and aircraft parts manufacturer, was in talks with Visteon. The company later dropped out as it was unable to agree to certain conditions.

Loss-making Visteon makes electronic items, powertrain controls, engine induction, chassis and lighting for vehicle manufacturers. At present, it employs around 45,000 people in 26 countries, including the US, China and Germany.

The company posted a net loss of $153 million on sales of $2.93 billion in its first quarter ended March 31, 2007. It had a debt of $2.2 billion on March 31, 2007, which remained unchanged from the end of the previous financial year.

At a shareholders' meeting earlier this year, the company had said it had drawn up a restructuring programme to come out of debt. It had earlier sold certain chassis operations in Germany, Poland and Brazil to Special Situations Venture Partner.