VAN BUREN TOWNSHIP, Michigan,
Jan. 13, 2014 /PRNewswire/ --
- Visteon to become one of world's top three suppliers of
automotive cockpit electronics with combined annual sales of
$3 billion
- Full-range cockpit electronics product portfolio
- No. 2 globally in driver information
- Advanced position in connectivity and infotainment
- Leadership in emerging markets
- Increases customer diversification and expands cockpit
electronics footprint to better support automakers' global
platforms
- Provides opportunity for long-term margin improvement through
economies of scale and operational synergies
- Visteon also gives update on exit strategy for its interiors
business
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In a move that will create one of the world's three largest
suppliers of vehicle cockpit electronics, Visteon Corporation
(NYSE:VC) has agreed to purchase the automotive electronics
business of Johnson Controls (NYSE:JCI) in a cash transaction
valued at $265 million, subject to
adjustment. The acquisition is subject to certain regulatory and
other consents and approvals and is expected to be completed in the
second quarter of 2014.
The acquisition will enhance Visteon's competitive position in
the fast-growing vehicle cockpit electronics segment by
strengthening its global scale, manufacturing and engineering
footprint, product portfolio and customer penetration. The combined
business will be a $3 billion global
electronics enterprise with a No. 2 global position in driver
information and above-average growth rates for the segment,
supplying nine of the world's 10 largest vehicle manufacturers.
In the fiscal year ended Sept. 30,
2013, the business to be acquired by Visteon generated
approximately $1.3 billion in revenue
and about $58 million in EBITDA
(earnings before interest, taxes, depreciation and amortization).
This EBITDA includes a deduction of approximately $12 million for corporate allocations that will
not transfer with the transaction. Visteon will assess the
necessary addition of resources at its corporate center to support
this operation. The transaction offers opportunities for long-term
margin expansion through economies of scale, with estimated annual
cost synergies reaching more than $40
million by 2017. The transaction will not impact the
company's previously announced $1
billion share repurchase program, for which $875 million remains authorized.
Visteon President and CEO Timothy D.
Leuliette said the transaction reinforces Visteon's
commitment to cockpit electronics as one of Visteon's two core
businesses, along with Halla Visteon Climate Control, the world's
No. 2 automotive climate control supplier.
"We look forward to continuing on our path of value creation for
customers and shareholders by integrating this highly regarded
business into the Visteon Electronics family," Leuliette said.
"This is a strong strategic fit with our existing electronics
portfolio and gives us the worldwide scale and cost efficiencies
needed to support vehicle manufacturers' global platforms and
programs. It also diversifies our electronics customer base,
solidifies our already strong global footprint, and brings new
technologies, capabilities and outstanding engineers to help grow
our business."
The business to be acquired from Johnson Controls provides
automakers with driver information, infotainment, connectivity and
body electronics products. The transaction involves about 4,800
employees, including about 1,000 engineers, electronics specialists
and designers at seven research and development centers in
Europe, North America and Asia. The business has a diversified customer
base, with BMW, Honda, Renault-Nissan, PSA Peugeot-Citroen and Ford
representing about 72 percent of its annual revenue.
By leveraging the combined strengths of the businesses,
Leuliette said, Visteon will create a new global electronics market
leader, capable of growing profitably as an enterprise that is
"ideally positioned at the intersection of consumer electronics and
the connected automobile of today and tomorrow."
Martin Thall, president, Visteon
Electronics, said the transaction will allow Visteon to better
serve vehicle manufacturers through its expanded global scale and
customer base, and accelerate growth and market expansion
objectives.
"The combined business will result in market and technology
leadership in major cockpit electronics technologies, as well as
opportunity for entry and fast growth into new product lines,"
Thall said. "The size and scale of our integrated research,
development, and engineering will solidify Visteon as the 'go to'
global innovation partner for automakers who require rapid
development cycles and fast time-to-market.
"Visteon and Johnson Controls are committed to maintaining
complete business continuity and providing excellent customer
service while completing this transaction and driving a successful
integration," Thall added.
Advising Visteon on the transaction are Rothschild Inc. and
Skadden, Arps, Slate, Meagher & Flom LLP.
Visteon Electronics, a division of Visteon Corporation, is a
leading supplier of automotive cockpit electronics that delivers
innovative in-vehicle user experiences through solutions in user
interfaces, connectivity and open architectures. Supported by a
global network of 16 manufacturing facilities, four technical
centers and 11 customer centers, Visteon Electronics currently
employs approximately 6,500 people in its consolidated
operations.
Interiors Divestiture Update
In conjunction with the announcement on the electronics
acquisition, Visteon provided an update on its previously disclosed
intentions to divest its automotive interiors business. The company
intends to exit Visteon Interiors in three separate transactions
targeted for signing in the first half of 2014. The transactions,
assuming definitive agreements are concluded, are planned to be
structured as stand-alone sales involving three separate
buyers.
The combination of these potential transactions is expected to
have a neutral value impact, as the objective of the company is
achieving an outcome where the cash outflows are expected to
approximately equal any unfunded pension and debt liabilities that
may be transferred, as well as certain assets likely to be
retained.
About Visteon
Visteon is a leading global automotive
supplier delivering value for vehicle manufacturers and
shareholders through businesses including:
- Halla Visteon Climate Control, majority-owned by Visteon and
the world's second-largest global supplier of automotive climate
components and systems.
- Visteon Electronics, a leading supplier of audio and
infotainment, driver information, center stack electronics and
feature control modules.
- Visteon Interiors, a global provider of vehicle cockpit
modules, instrument panels, consoles and door trim
modules.
Visteon designs, engineers and manufactures innovative
components and systems for virtually every vehicle manufacturer
worldwide. Through its family of businesses, Visteon generated
$13.8 billion in sales in 2012,
including non-consolidated operations. With corporate offices in
Van Buren Township, Mich. (U.S.);
Shanghai, China; and Chelmsford, UK; Visteon has facilities in 29
countries and employs about 22,000 employees in its consolidated
operations. Learn more at www.visteon.com.
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