Adient, a global leader in automotive seating, has entered into a definitive agreement with Yanfeng Automotive Trim Systems Co., Ltd. (Yanfeng) to make certain changes to their existing joint venture relationships.
As part of these changes, Adient has agreed to sell its 30 percent ownership stake in YFAI to Yanfeng for US$ 379 million. Adient and Yanfeng also agreed to extend the term of their YFAS joint venture to Dec. 31, 2038. The extension demonstrates Adient’s continued commitment to the partnership and the region, according to the company.
In addition, Adient has agreed to sell certain patents and other intellectual property exclusively used in its seating mechanisms business to AYM for US$ 20 million, and AYM will license such intellectual property back to Adient. Going forward, Adient and AYM also have agreed to license to each other certain other intellectual property related to the seating mechanisms business.
Further, Adient and Yanfeng have agreed to amend the AYM joint venture agreement to update AYM’s business scope to allow AYM to carry out its seating mechanisms business both in and outside of the People’s Republic of China (PRC) for both PRC and non-PRC customers. Adient intends to leverage AYM’s expanded presence in the global seating mechanisms market as it continues to right-size its own metals business. The amended AYM joint venture agreement also will reflect certain governance changes such that Yanfeng will have consolidation rights of AYM’s financial results. Adient will continue to hold a 50 percent ownership interest in AYM.
The agreed transactions are cross-conditioned on each other and closing is subject to regulatory approvals and other customary closing conditions. Adient expects the transactions to be completed within its 2020 fiscal year.
“We value our strong relationship with Yanfeng. These pending transactions expand that valuable strategic partnership while allowing Adient to continue to focus on our core business, further positioning us for long-term success,” said Doug Del Grosso, Adient’s president and CEO.
Proceeds from the transactions are expected to be used by Adient to pre-pay a portion of the company’s debt and for general corporate purposes.