If successfully completed, it would be the largest ever acquisition of a US company by a European private equity firm.
Neither party to the deal is commenting, but an announcement could me made in the next two weeks.
Mark IV is another old economy stock that has suffered as investors have poured their money into internet-related stocks . It builds power transmission, fuel and fluid handling systems for the automotive and other industries.
A $1.2 billion deal would easily beat the record set by Doughty Hanson when it paid $530m for Knowles Electronics.