NEW YORK - Buyout firm Cypress Group has been selected as the lead bidder in a $1 billion auction to buy Dana Corp.'s automotive parts unit, although Carlyle Group is a close second, people familiar with the auction said yesterday.
Dana, Toledo's largest corporation, put its automotive replacement parts unit on the block Dec. 3, and has since been in talks with various potential buyers.
The two buyout firms are vying closely for the unit and each are offering more than $1 billion to close the sale, sources told Reuters news service. A deal is not expected for several weeks, sources said.
Officials of Cypress and Carlyle, a large private equity firm, both declined to comment.
The replacement parts division accounts for a fourth of Dana's annual sales and employees.
The move, divesting $2.2 billion worth of sales and 15,000 employees, allows the company to focus on its core business of selling drivetrains, axles, and other parts to DaimlerChrysler AG and other car manufacturers, the company said. The replacement parts unit has not done well and Dana needs to shore up its financial picture, analysts have said.
The unit for sale makes replacement parts and components for 95 percent of the world's cars, including Wix Filters and Raybestos brakes, Dana said.
Dana hired investment banks Credit Suisse First Boston and Goldman Sachs & Co. to look for buyers. The sale proceeds are expected to be used to pay debt, contribute to pension funds, and reinvest in core divisions.