The company, which specialises in exhaust technology as well as heating and air conditioning systems, has mandated Citi (>> Citigroup Inc) to help it look at strategic options, including whether to continue without new tie-ups, the sources said.

If Eberspaecher, Germany's 10th biggest car parts maker, does decide to start an official process to attract a buyer for a minority stake or a joint venture partner this would not start before the autumn, one of the sources said.

The group, whose customers include Daimler (>> Daimler AG), BMW (>> Bayerische Motoren Werke AG) and Volkswagen (>> Volkswagen AG), could be valued at more than $1 billion including debt in such a transaction, they said.

A spokeswoman for Eberspaecher denied that it was looking for a partner. The family owners, represented by Chairman Guenter Baumann, were not available for comment. Citi declined to comment.

"Eberspaecher does not necessarily need money and partnering with a peer would be done to tackle markets like Asia or the U.S., where it so far has only small activities," the source said.

While peers like Valeo (>> VALEO) of France and U.S. group Tenneco (>> Tenneco Inc) are seen as unlikely new stakeholders due to potential antitrust issues, the company would look to tie up with Asian car parts makers, the sources said.

It could also target private equity groups with a penchant for auto assets, such as Carlyle (>> The Carlyle Group LP), Bain, KPS or Platinum, the sources said.

In the aftermath of the global financial crisis, sales slumped 40 percent in 2009. Business has since rebounded although ongoing expenses to restructure Eberspaecher, in particular the Exhaust Technology division, led to an 80 percent drop in net profit last year, to 3.6 million euros ($4 million).

Provisions for an investigation into price fixing also weighed on 2014 earnings. Last month, the European Commission fined Eberspaecher 68 million euros as part of the case.

Eberspaecher, which has 8,400 employees, has cut staff in Sweden and Germany to offset a slump in demand in Europe, and overhauled its commercial vehicle exhaust business to help truckmakers meet the mandatory Euro 6 emissions standard.

In its 2014 fiscal year, Eberspaecher posted 3.6 billion euros in sales and 130 million euros in earnings before interest, taxes, depreciation, and amortisation (EBITDA).

The company said in its annual report that it expects revenue and earnings to increase significantly in the coming years as it expands in new markets such as Asia and South America and as it launches new products.

Car parts makers such as Continental (>> Continental AG), Valeo, Faurecia (>> FAURECIA) and Leoni (>> LEONI AG) trade at six or seven times their expected EBITDA.

Eberspaecher could be valued at at least 800 million-900 million euros if it reaped a similar valuation in any potential deal, the sources said.

The company was founded by Jakob Eberspaecher in 1865 as a workshop specializing in metal-framed roof glazing. In the 1930s it started producing car parts, such as mufflers and heating systems.

($1 = 0.9070 euros)

(Additional reporting by Edward Taylor; Editing by Ludwig Burger and Susan Fenton)

By Arno Schuetze