Automotive equipment supplier Lear Corp. said Monday a group affiliated with billionaire investor activist Carl Icahn offered to buy the company for about $2.61 billion. But its share price climbed well above the offered price.
The offer of $36 a share from American Real Estate Partners LP represents a premium of 4 percent over the stock's Friday closing price of $34.67.
Lear, whose products include seats and electronic systems, and the bidder are negotiating specific terms and there is no formal agreement, the company said.
Under the terms of the deal proposed by Icahn's group, Lear's senior management, including Chairman and Chief Executive Bob Rossiter, would remain in place. Lear said its board will formally consider the offer once negotiations end.
Lear had sales of $17.8 billion in 2006 and reported a wider fourth-quarter loss after taking charges to dispose of its interiors unit. The company has seen profit and sales shrink in recent periods after North American carmakers sharply cut production, but its latest results beat Wall Street estimates.
Lear put its loss-making interiors unit into a joint venture controlled by billionaire Wilbur Ross.
Craig Fitzgerald, an automotive analyst with Plante & Moran, said all plastic interior suppliers are struggling with the same issues, including increasing resin prices, excess capacity and market share declines by the domestic automakers. But Fitzgerald said Lear's seating and electronics businesses are attractive to investors.
"More and more electronics are going into vehicles, and seats continue to grow in value because of more functionality," he said. "Apparently, Mr. Icahn sees some way potentially to grow the strong business units and possibly exit those sectors that don't have great prospects near-term."
