September 10, 2015 / 8:08 AM / 3 years ago

UPDATE 2-Gores to auction German car parts maker Hay -sources

* Auction could start this year -sources

* Linamar, Metaldyne, Mahindra seen as potentially interested

* Deal could value Hay at 6-7 times EBITDA -source (Adds details on Hay, sector M&A)

By Arno Schuetze and Alexander Hübner

FRANKFURT, Sept 10 (Reuters) - U.S.-based investor The Gores Group has put German car parts maker Hay up for sale in a potential 400 million-euro ($448 million) deal, several people familiar with the deal said.

The private equity firm, which acquired Hay for more than 100 million euros in 2012 after Hay’s near-bankruptcy in the economic crisis and has since expanded the business, has now asked investment bank Rothschild to explore options for the metal-forging specialist and may start an auction process as early as the end of 2015, the sources said.

Hay could appeal to peers such as Linamar, Metaldyne, BorgWarner, Germany’s Mahle or India’s Mahindra, the people said.

Hay has annual earnings before interest, taxes, depreciation and amortisation of about 60 million euros and could be valued at six to seven times that in a potential deal, the sources said.

Gores, Hay and Rothschild all declined to comment.

Hay said last year it was targeting annual sales of 650 million euros within two to three years.

Germany’s auto components suppliers have seen a wave of merger and acquisition deals over the last year as the industry’s leaders seek to expand their product portfolios, with the consequently high valuations proving lucrative for the sellers.

Expansion is being driven by the demands of carmakers, who increasingly want suppliers who can move beyond their traditional products and provide a wider range of equipment, such as infotainment systems and self-driving technology.

In recent months in Germany, Mann + Hummel bought U.S. peer Affinia, Canada’s Magna bought Getrag and Mahle bought U.S.-based Delphi’s air-conditioning unit.

Hay was founded by Johann Hay in 1925 as a blacksmith’s shop supplying the early automobile industry which developed into a supplier of forged and machined components such as flywheels, seamless rings, drive gears and crown wheels for differential gears. ($1 = 0.8936 euros) (Editing by Georgina Prodhan and Greg Mahlich)

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