Carlyle Group (CG) May Be Looking to Trim $5B Bid on DuPont's (DD) Paint Unit

August 17, 2012 10:10 AM EDT
Shares of The Carlyle Group (Nasdaq: CG) are positive Friday morning following reports that the private equity firm is said to be looking for a better deal on a paint job (er, acquisition).

Carlyle submitted a winning $5 billion bid for DuPont's (NYSE: DD) auto paint business recently, which came following reports in March that DuPont was getting substantial bids for the unit and news in July that three firms submitted final bids.

But, Carlyle thinks the unit should be priced much less than what current bids might suggest. Following the close of bidding, Carlyle found out it may have bid up to $600 million more than the second-place bidder, Apollo Global Management (NYSE: APO).

DuPont and Carlyle remain in exclusive talks.

The NY Post reports today that Carlyle might look to pay somewhere between $4.2 billion to $4.3 billion for the unit, up to a 16 percent discount. While there is no rule against lowering a bid before a deal closes, doing so could also hurt the reputation of a firm.

Aside from the substantial premium Carlyle believes its paying, the firm might also be looking to trim the price due to lower volume shipments to auto shops, as noted in the March report.

Shares of Carlyle are about flat Friday, while DuPont is also slightly higher on the session.

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