October 15, 2015 / 1:15 AM / 4 years ago

Exclusive: Canada's Linamar in talks to buy French auto-parts maker Montupet - sources

LONDON/FRANKFURT (Reuters) - Canadian auto parts manufacturer Linamar Corp (LNR.TO) is in talks to buy French peer Montupet MNTP.PA in a deal that values the company at roughly 800 million euros ($914.96 million), two sources familiar with the matter said on Wednesday.

Linamar Corp. Chief Executive Linda Hasenfratz addresses the auto parts manufacturer's annual meeting of shareholders in Guelph, approximately 75 km (46 miles) west of Toronto, May 17, 2006. REUTERS/J.P. Moczulski

Montupet is working with U.S. investment bank Jefferies to negotiate a deal, the sources said, cautioning that no transaction was certain and talks could still fall through.

Linamar and Jefferies declined to comment.

Montupet, the supplier of aluminum products to Peugeot (PEUP.PA) and Volkswagen (VOWG_p.DE), was not immediately available for comment, but its shares were suspended from trading in Paris on Thursday at the company’s own request, exchange Euronext said in a statement.

If the deal goes ahead, it would be the latest transaction carried out by a Canadian firm in Europe after Magna International Inc bought Germany’s car parts maker Getrag for 1.75 billion euros in July.

It would also show that the scandal over Volkswagen cheating pollution emissions tests has not eroded confidence among industry players seeking to expand in Europe.

Montupet said in September that it had not been affected by the problems faced by Volkswagen, since it supplies Audi-brand V6 cylinder heads to Volkswagen, which are not linked to antipollution standards.

Based in Clichy, on the outskirts of Paris, Montupet serves a number of international carmakers including Renault (RENA.PA), BMW (BMWG.DE), General Motors (GM.N) and Ford (F.N).

It employs more than 3,200 people and has a market capitalization of 668 million euros.

Earlier this year its management team, who owns around 37 percent of the company, expressed interest in selling their stake to an industrial partner active in the automotive industry and familiar with light-metal casting.

Analysts at Hamburg-based investment bank Berenberg said Montupet, led by the 64-year old CEO and chairman Stephane Magnan, was seeking a tie-up with an industry player as a way to expand into China.

Magnan has 11.69 percent of the company while executive managing directors Marc Majus and Didier Crozet, aged 67 and 66, respectively, own a combined 20.49 percent of the company.

Linamar, with a market cap of about $3.7 billion, has often used mergers and acquisitions to boost its international footprint.

Last year, it acquired a majority stake in Germany’s auto-parts supplier Seissenschmidt.

A tie-up with Montupet would help it compete with larger industry rivals including Germany’s ZF Friedrichshafen which swallowed U.S. rival TRW Automotive Holdings in 2014 to create the world’s second-largest automotive supplier by sales.

In addition to France, Montupet is present in other European countries including Belgium and Spain, as well as the United States, India and Mexico.

In 2014, Montupet had revenues of 451.8 million euros and core earnings of 91.8 million euros.

(Corrects figure in paragraph 5 to 1.75 billion euros, not million)

($1 = 0.8744 euros)

Additional reporting by Allison Martell in Toronto, Emiliano Mellino in London and Matthieu Protard in Paris; Editing by Diane Craft and Andrew Callus

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