German industrial group Siemens will likely decide by the end of July whether to float its automotive unit VDO or sell it outright, a source close to the supervisory board told Reuters today.
Siemens reiterated its preference was for a partial flotation of VDO, which specializes in car electronics and sensors, despite interest from potential buyers.
A source familiar with the matter has told Reuters German car-parts supplier Continental may offer more than 10 billion euros ($13.4 billion) -- more than Siemens could hope to raise in an IPO.
But the conglomerate wants to maintain control of VDO, which is a successful business but one that does not fit Siemens's new focus on products that address global trends such as climate change and ageing populations.
An IPO would also be popular with labor representatives, who say they would prefer VDO to stay under the control of Siemens, which they judge currently offers the best prospects for long-term job security and investment in the business.
A Siemens spokesman said today IPO preparations were in full swing and an initial public offering was planned before the year end. He confirmed there had been expressions of interest from would-be outright buyers of VDO, without elaborating.
A source with knowledge of the situation said a final decision on the matter would be made by a handful of people around Chief Financial Officer Joe Kaeser. Another source said the decision would likely be approved by the Siemens supervisory board at the end of July.
Peter Loescher is due to take over from Klaus Kleinfeld as Siemens CEO on July 1.
German business daily Handelsblatt reported that Siemens was opening up VDO's books to three potential buyers -- Continental, U.S. car-parts supplier TRW and a private equity bidder that could be Permira or KKR.
Continental, which has made no secret of its interest in buying VDO, declined to comment. Permira and KKR were not immediately available.
A sale to private equity would be politically unacceptable to Siemens, one source familiar with the matter has said.
Siemens has mandated investment banks Deutsche Bank, Goldman Sachs and Morgan Stanley to prepare a flotation of VDO.