(Reuters) - Private equity firm American Securities LLC is looking to merge three of its auto parts manufacturing companies and take the combined company public at a valuation of around $4 billion, including debt, according to people familiar with the matter. American Securities has had advanced discussions with investment banks about merging Metaldyne LLC, HHI Group Holdings LLC and Grede Holdings LLC, and has drawn up plans for a subsequent initial public offering, the people said this week. Combined, the three companies have annual earnings before interest, taxes, depreciation and amortization of more than $500 million, some of the people said. The sources asked not to be identified because the discussions are confidential. American Securities declined to comment, while Metaldyne, HHI and Grede representatives did not respond to requests for comment. The IPO would come more than two years after buyout firms Carlyle Group LP (CG.O) and Onex Corp (OCX.TO) took public Allison Transmission Holdings Inc (ALSN.N), a maker of automatic transmissions for trucks, buses and military vehicles. Allison Transmission's shares have risen 32 percent in the last 12 months, outperforming the S&P 500 Index .INX, which gained 20 percent. Plymouth, Michigan-based Metaldyne makes metal-based components for the automotive light-vehicle market. Its customers include all major automakers, among them General Motors Co (GM.N), Ford Motor Co (F.N) and BMW AG (BMWG.DE). Royal Oak, Michigan-based HHI makes forged parts, wheel bearings and powdered metal engine and transmission components for the automotive and industrial sectors. Southfield, Michigan-based Grede is one of the largest U.S. producers of cast-iron components for cars, light trucks, and commercial and agricultural vehicles. American Securities acquired Metaldyne from Carlyle for more than $800 million and HHI from KPS Capital Partners LP for more than $700 million in 2012. It acquired Grede from Wayzata Investment Partners LLC and GSC Group for $825 million earlier this month. American Securities, a New York-based firm with about $10 billion in private equity assets under management, is also planning what could be one of this year's largest IPOs, Reuters reported last week. American Securities-backed Fairmount Minerals Ltd, one of North America's largest providers of industrial sand to the oil and gas industry, is exploring an initial public offering of around $1 billion that would value the company at more than $6 billion, including debt. (Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Steve Orlofsky)
