Autoliv Inc., a global provider of automotive safety systems, has entered into a definitive agreement to establish a joint venture (JV) with Nissin Kogyo. Nissin Kogyo is a leading supplier of high-performance braking systems for automotive and non-automotive markets, mainly in Japan.
Autoliv and Nissin Kogyo intend to form a new JV in the product areas of brake control and brake apply systems. Autoliv intends to own 51 percent of the joint venture and have management control. This falls in line with consolidation purposes and in accordance with U.S. GAAP accounting principles.
The JV will combine the current brake control business of Autoliv with a “carve-out” of Nissin Kogyo’s automotive braking business. With manufacturing facilities in Japan, China and the United States, the JV will include approximately 2,000 technical, commercial, manufacturing and administrative employees focused upon the design, development and production of brake control and brake apply systems for the global light vehicle market. The JV will have three engineering sites and two test tracks with access to more than 1,200 patents and other intellectual property.
“This joint venture expands our capability in safety systems and strengthens a key building block in the actuator area of our portfolio towards autonomous driving. With this joint venture we further reinforce our commitment to a safety systems approach to real life safety,” said Jan Carlson, Autoliv chairman, president and CEO. “We look forward to this long-term partnership with Nissin Kogyo and expect to expand the business, while supporting the current customers.”
The enterprise value of the JV is around JPY 65 billion (~$545 million). Upon closing, Autoliv will purchase 51 percent of the JV for JPY 33.15 billion (~$278 million), subject to customary adjustments. Autoliv expects the transaction to close in early the first quarter of 2016, subject to customary closing conditions and approvals, including regulatory approvals and Nissin Kogyo shareholder approval.
The 2016 pro-forma annual revenue estimate for the JV is approximately $600 million. Excluding purchase accounting effects, Autoliv expects the JV to operate in line with Autoliv’s long-term operating margin targets for 2016.
