Peers circle Volkswagen's large engines unit

Volkswagen secured a euro 20-bn bridging loan in January to keep above water

Volkswagen has received expressions of interest for a unit making engines used in ships or small power stations, as rivals sense an opportunity to get their hands on the asset as a result of the car maker's emissions scandal, several sources familiar with the matter said.

Peers from China, Europe and the United States have recently told Volkswagen they would like to buy the operations of MAN that are not central to its trucks business, they said, adding that the unit may be valued at up to 4-5 billion euros ($4.51-$5.6 billion).

Volkswagen has so far stuck to its line that the business, which made an operating profit of 206 million euros on sales of 3.3 billion euros in 2014, is not for sale.

A Volkswagen spokeswoman described the reported interest as unfounded "speculation".

Europe's biggest carmaker is struggling to cope with the fallout from the scandal, and last week postponed the publication of its 2015 results, saying it was unable to calculate the cost for fines, lawsuits and vehicle refits after cheating emissions tests. Separately, the trucks unit said earlier this week that it was keeping all options open with regard to expanding overseas, including a stock market listing. Volkswagen secured a 20 billion-euro bridging loan in January to keep above water until it can refinance itself in the bond market as it used to before the scandal broke. It has stressed that no fire sales are necessary and that no specific assets have been discussed with respect to a potential divestment. But two people familiar with the matter said it was clear that if Volkswagen did have to sell something to meet the costs of the scandal, MAN non-truck diesel would be the first thing it would look at. Another person said that Volkswagen continued to get expressions of interest for the unit and was expected to engage soon in a round of exploratory talks with a potential Chinese suitor.

"There has been a formal exchange. Talks are in preparation. But it's all very early stage," the person said, adding that Volkswagen has not allowed any peer to do a due diligence assessment of the asset.

Large Chinese peers include Yuchai, Weichai and Sinomach. Chinese companies have been on a acquisition spree in Germany recently, buying up industrials groups in recent weeks as they try to broaden their international footprint. General Electric, Siemens and Sulzer are also being named by investment bankers as potential suitors. However, they would likely only show interest in parts of the business, one of the sources said. "Everyone is expecting it to come out - the question is when," another banker familiar with the car industry said.