Visteon Corp. is in discussions to sell its automotive interiors business, but “there's no gun to our head” to sell quickly, the U.S. auto parts supplier's top executive said Sept. 19.
“We know the business will be worth more when Europe starts to rebound,” Visteon interim CEO Tim Leuliette said during an investor presentation. “If someone wants to pay us now for that kind of value, we're willing to accept that. In the meantime, we're running the business.”
It will take the European auto industry another 18 months to “get legs,” Leuliette said.
Visteon plans to sell its climate business into its Halla Climate Control Corp. joint venture for cash, the firm said in a regulatory filing ahead of an investor call Sept. 20.
In slides made available from the presentation, Visteon said the transaction will achieve its long-term objective of consolidating its climate operations into one company. The move will improve how the business interacts with global customers and increases corporate liquidity, the presentation said.
Halla will become the No. 2 player in the global automotive climate business, the company said. Visteon would continue to own 70 percent of the Halla joint venture.
“Visteon and our customers have long seen the benefits of consolidating Visteon's climate operations,” Visteon spokesman Jim Fisher said via email. “This is the most viable path to merging those businesses and creating a world-class climate organization.”
The filing also indicated the supplier is also looking to sell its Chinese joint venture Yanfeng Visteon Automotive Trim Systems Co. Ltd. “over time ... and at right value.” The venture is between Visteon and Huayu Automotive Systems Co. — a subsidiary of China's largest automaker, government-owned Shanghai Automotive Industry Corp. Not part of that venture is a Yangfeng Visteon injection molding site near Detroit that is wholly owned by Huayu.
The moves end speculation that Visteon would dissolve after former CEO Don Stebbins, who opposed a company breakup, left last month.
For months, analysts have speculated Visteon would, and should, make its biggest play to acquire the remaining shares of its Korean joint venture Halla. Visteon, which owns 70 percent of Hall, said July 4 that it planned to offer $805 million to acquire the remaining 30 percent stake.
But it also announced that its deal to sell its remaining interiors business into Yanfeng had fallen apart. Visteon's interiors business generated $2.16 billion in revenue in 2010.
On July 23, the Halla deal failed after Korea's National Pension Service, which holds an 8.1 percent stake in Halla, rejected Visteon's offer.
“Considering the corporate value and future growth prospects of Halla Climate, we believe not participating in the tender offer would be better for long-term returns,” NPS said in a statement.
South Korea's Mando Corp. continues to say it is pursuing Visteon's stake in Halla and is establishing a Chinese holding company listed on the Hong Kong Stock Exchange to do so.
Halla Climate and the remainder of Visteon's climate control business are worth roughly $2.1 billion, according to an Aug. 30 analyst note from JPMorgan Chase & Co.
Mando, a large Hyundai supplier, is a subsidiary of Halla Group, which lost the climate control business when it entered bankruptcy in 1997. Speculators believe a play by Mando is to put Halla Group back together. Mando is reportedly run by a cousin of Hyundai Chairman Chung Mong-koo.