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TI Group mulls unit sale
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September 15, 2000: 6:10 a.m. ET
UK engineering co may sell auto systems unit; triggers break-up speculation
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LONDON (CNNfn) - British engineering firm TI Group PLC said Friday it was considering spinning off its automotive systems unit, sparking forecasts that the company would then divest its other three units.
"The process is at a preliminary stage and a further announcement will be made as developments warrant," the company said.
The Financial Times reported that TI (TI-) was looking to raise £1.2 billion ($1.7 billion) and that the company could break up following the sale. The automotive unit, which makes fluid storage and delivery systems for vehicles, accounted for about half of TI Group's sales and operating profit in the first half of 2000, making it the largest of the company's four divisions.
TI shares were up 3.3 percent at 365 pence, after surging 9 percent following the announcement. The whole of TI Group is worth about £1.9 billion.
Trade and financial firms put in bids for the unit Monday and private equity group Doughty Hanson was thought to be among the potential buyers, the FT reported.
Company executives were unavailable for further comment Friday morning.
"It's quite sad - it shows that the management hasn't been able to act on any of the other options they were looking at - that someone might merge with them, or a buyout," engineering analyst Zafar Khan at SG Securities told CNNfn.com.
U.S. auto parts makers Delphi Automotive Systems Corp, a spinoff from General Motors Corp., or Ford Motor Co.'s former unit Visteon Automotive Systems could be possible buyers, Khan said.
He said the sale of the unit could lead to the break up of TI.
"Once they sell the automotive systems unit, it's difficult to see their raison d'etre," Khan said.
TI's remaining units make mechanical and pipe sealing technology and components for airplane engines and fuel tanks.
Shares surge on sale speculation
TI had said last month it expected double-digit growth this year following a two-year restructuring, and dismissed speculation it would sell off some units.
The group reported a 12 percent increase in first half profit before tax, goodwill and exceptional items of £146.5 million ($205.9 million) on sales of £1.68 billion.
Operating profit for the automotive division, which makes airbags, brake lines, fuel storage and delivery systems, surged 52 percent to £90 million, helped by two acquisitions, which contributed to a 76 percent rise in sales to £847.7 million. 
-from staff and wire reports
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TI Group
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