Volkswagen Considers Options for Transmissions Maker Renk: Sources – New York Times

Posted: Monday, July 17, 2017

It has already launched a sale of motorcycle brand Ducati.

Renk is 76 percent owned by VW unit MAN and had 390 million euros in equity and 214 million in cash, according to its 2016 annual report.

Last year, Renk posted profit before taxes of 65 million euros and earnings before interest, tax, depreciation and amortization of about 80 million euros on sales of 496 million.

Bidders are expected to value the business at about 8-9 times its expected core earnings, a slight discount to peers such as Timken, Rexnord and Allison Transmission, which trade at 9-10 times. “Renk may be worth 10 times. But a buyer will need to offer minority shareholders a small premium. That could mean that Volkswagen will get slightly less for its stake,” one of the people said.

Renk is expected to attract interest from private equity groups such as KKR, CVC, Cinven, Carlyle and Advent, the sources said.

Separately, some Renk peers are expected to look at the asset. However, Renk’s exposure to the defense industry will make it hard for non-NATO buyers to acquire Renk, the sources said.

“Japanese groups such as Sumitomo Heavy, Kawasaki or Mitsubishi may take a look. But U.S. groups like Rexnord or Timken who would mainly be interested in the non-defense related products are unlikely buyers,” another person close to the matter said.

Renk, founded in 1873, currently employs 2,200 staff. VW has said repeatedly in the past that it wanted to keep the business.

(Additional reporting by Jan Schwartz; Editing by Mark Potter)

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