CPPIB and Onex Eyes Bid for UK-based Tomkins

The Canada Pension Plan Investment Board (CPPIB) and Onex Corp are working together to propose a takeover of UK-based car parts maker, Tomkins Plc, just as the weakening British pound attracts more North American investors eager to take assets off of UK companies’ hands.

While the CPPIB and Toronto-based Onex have not released a formal bid, the companies have proposed a deal, which is worth over $4 billion.

After Tomkins reported receiving the proposal on July 19, 2010, the possible takeover lifted the car parts manufacturer’s shares 33.1% to 306.6 pence by mid-morning in London, thereby valuing Tomkins at approximately £2.7 billion ($4.1 billion).

The stock reached 314 pence - the highest Tomkins has obtained since 2006. However, it didn’t make it to the 325 pence cash offer that potential buyers considered.

In May 2010, Onex CEO Gerard Schwartz expected the current economic situation to create investment opportunities for Canada’s largest private equity firm. At that time, the company possessed about C$1 billion ($950 million) in cash, as well as third party uncalled capital worth C$3.9 billion ($3.8 billion) for acquisitions.

The CPPIB is Canada’s second largest pension fund manager and oversees assets worth C$127 billion. It is also one of the top private equity investors in the world.