Lear Siegler Sells Car Parts Unit in $500-Million Deal

Lear Siegler Holdings has sold its automotive parts subsidiary to the subsidiary’s management and Kidder, Peabody & Co. in a $500-million leveraged buyout.

Forstmann Little & Co., which has sold a number of Lear Siegler units since it acquired the conglomerate for $2.1 billion last year, agreed late Friday to sell Lear Siegler Seating Corp., which produces automobile seats.

Kidder Peabody--the investment firm owned principally by General Electric Financial Services--will get most of the equity in the new company in exchange for about $200 million in financing.

Of the $200 million, about $50 million is an equity investment, according to David DeNunzio, senior vice president at Kidder Peabody. Manufacturers Hanover, the major lender, will provide $300 million in financing.

However, senior managers of Lear Siegler Seating will run the new company, and its main offices will remain in Southfield, Mich.

“We were impressed with the company’s management,” said DeNunzio, explaining Kidder Peabody’s interest in the subsidiary. “We will have seats on the board, but we don’t plan to involve ourselves (in daily management).”

DeNunzio said the deal is a long-term investment designed to give Kidder Peabody an interest in an automotive segment that is expected to grow. The Big Three auto makers have been relying on suppliers for more and more parts in recent years.

‘Gain an Advantage’

Kenneth Way, who is chief executive and chairman of the new company, said Lear Siegler Seating’s managers wanted control of the operation to get a freer hand to pursue a larger share of the supplier market.

“By acquiring control of the company, we felt we could gain an advantage over the competition.” Way said, adding that no layoffs are planned.