Corporate leaders for the former TI Group Automotive Systems Division have given up plans to sell the unit and instead will spin it off into an independent company.
But the fuel-system provider still is likely to end up back on the market, once business conditions improve.
"That's the plan: to realize a sale in the future," Richard Bayliss said in a March 28 telephone interview.
Bayliss is spokesman for Smiths Group plc — the London-based business that formed late last year through the merger of TI Group plc and Smiths Industries plc.
Smiths agreed to merge with TI — then headquartered in Abingdon, England — only if the engineering conglomerate would sell off its auto unit. The unit comprised the plastic fuel-tank and fuel-line divisions, including the former Walbro Corp. and Bundy Group, with North American offices in Warren, Mich.
Smiths solicited bids but launched the effort just as the North American automotive industry went into a slump, and nearly 60 percent of TI's sales are in North America. Because it received no satisfactory bid, it decided on a spinoff.
Control of the as-yet-unnamed business unit will go to former TI Group Automotive executives, with Chief Executive Officer Bill Laule leading the company. Smiths Group will hold 19.9 percent of the shares, while former TI Group shareholders and executives will control the remaining stock, Bayliss said.
The auto unit had about 1.56 billion ($2.14 billion) in sales and 156 million ($222.9 million) in profit for the fiscal year ended July 31. For the first six months of the current fiscal year, it had sales of nearly 796 million ($1.14 billion).
The switch should improve the auto unit's status, said consultant Joel Kopinsky, a principal with ITB Group Ltd. of Novi, Mich. Even if the company changes hands later, it is better off as an independent unit than it has been under a parent that does not want it.