VAN BUREN TOWNSHIP, Mich. – Visteon Corp. has announced an agreement to divest the majority of its global automotive interiors business to an affiliate of Cerberus Capital Management, L.P. The transaction, which is subject to regulatory reviews and other conditions, is expected to be complete by Dec. 31, 2014.
Visteon also completed a previously announced agreement to sell its 50 percent ownership stake in a Korean automotive interiors joint venture, Duckyang Industry Co., Ltd. (024900:KS), as part of the divestiture of its interiors business. On March 19, Visteon announced the agreement to sell its stake in the joint venture to certain management shareholders of Duckyang and associated parties, for the equivalent of about $24.1 million, plus approximately $6 million in dividends.
The operations to be sold to the Cerberus affiliate had revenues of approximately $1 billion in 2013 and produce a range of automotive interior products supplied to global vehicle manufacturers, including cockpit modules, instrument panels, door panels and floor consoles. These operations encompass 15 manufacturing plants, five just-in-time assembly plants and six engineering centers in Europe, Asia and South America. As part of this omnibus transaction, the Cerberus affiliate made an irrevocable offer to purchase the interiors business in France, and Visteon France will now begin consultation with employee representatives. In total, more than 4,000 manufacturing, engineering and administrative employees are part of the business involved in the transaction.
Under terms of the agreement with the Cerberus affiliate, Visteon will divest the interiors operations for nominal consideration and will contribute up to $95 million to the business. The Cerberus affiliate will assume approximately $20 million of pension and other liabilities of the business, while Visteon will retain ownership in certain real estate and other assets in South America and Europe worth, in aggregate, about $35 million. Visteon also will provide support services to the Cerberus affiliate.
"The transaction supports our previously announced intention to divest our interiors business and focus on our core thermal management and cockpit electronic ecosystems businesses, which enjoy market-leading positions in segments that are growing faster than the industry overall," said Timothy Leuliette, Visteon president and CEO. "We are pleased to be selling this interiors business to a well-capitalized, operationally focused investment firm with a track record for long-term value creation, where we think it will be an excellent fit."
Dev Kapadia, a Cerberus managing director, added, "We are pleased to make this long-term investment in Visteon’s interiors business, which has strong products, an outstanding management team, a skilled workforce, excellent customer relationships and solid manufacturing operations, including in emerging markets. Cerberus has a strong track record of supporting companies in this industry as they strive to reach their full potential, and we look forward to using this business as a platform from which to pursue additional acquisitions in the automotive interiors space upon completing this transaction."
