ArvinMeritor May Sell Aftermarket Unit According to Wall Street Analyst

Following up on rumours to the same effect, Reuters has reported that auto parts maker ArvinMeritor Inc. may follow the lead of two competitors and sell off its replacement parts business to focus on core assets.
More merger deals have been struck in the auto supply sector this year than in all of 2003 or 2002, Merrill Lynch analyst John Casesa said in a research report dated Friday.
Those assets have largely been sold to financial buyers, and a divestiture by ArvinMeritor could bring the same bidders to the table again, a source in the auto industry said.
“Given the pickup in transaction activity in the automotive supplier sector, and given the interest of at least two private equity firms in the automotive aftermarket, we believe it is not unlikely that ArvinMeritor will explore a divestiture of its light vehicle aftermarket business,” Casesa wrote.
Private equity firms Carlyle Group and Cypress Group have shown a significant interest in the replacement parts sector, also known as the aftermarket, he said. New York-based Cypress, which recently agreed to buy the aftermarket business of parts maker Dana Corp. for about $1.1 billion, may hold a golden ticket in the case of an ArvinMeritor auction.