Visteon: A rumor here, a rumor there -- harsh reality everywhere

Dustin Walsh covers auto suppliers for Crain's Detroit Business, an affiliate of Automotive News.
UPDATED: 11/4/11 9:48 am ET

Editor's note: A previous version of this story inaccurately stated Visteon announced it is selling two units. Media reports indicated this to be true, not Visteon.

DETROIT -- Reports that Visteon Corp. is shopping two of its business units to prospective buyers should come as no surprise.

The supplier has been the center of more rumors than the entire horde of GOP presidential candidates. But Visteon's misfortune is that most, if not all, of the speculation has been true.

William Redmond Jr.'s resignation from Visteon's board in May was a catalyst that allowed the Cayman Islands-based hedge fund Alden Global to get what it wanted: a seat on the auto supplier's board. It got two when Redmond stepped down.

Alden threatened a proxy fight with management, which rightfully avoided the boardroom melee with a compromise: Place on the Visteon board Kevin Dowd, chairman and managing member of New York City-based Berkeley Square Advisors LLC, and Harry Wilson, CEO of Scarsdale, N.Y.-based Maeva Advisors LLC and former senior adviser to President Barack Obama's automotive task force.

Dowd and Wilson have since been pushing the board toward a sale, of its units or a whole, to the benefit of shareholders.

On Tuesday, JPMorgan Chase priced Visteon, including its joint venture interests, at $71 a share. It's currently trading at $55.

Reports also surfaced in June that Visteon's parts were worth more than the company as a whole. Analysts estimate that Visteon's stake in South Korea-based Halla Climate Control Corp. and China's Yanfeng Visteon Automotive Trim Systems are worth up to $4 billion alone. Visteon Corp.'s shares were down more than 16 percent at the time. They are now down more than 30 percent since the beginning of the year, and the supplier's market cap is at $2.83 billion.

Visteon management continues to fight against a breakup of the company, Reuters reported Wednesday.

However, Dowd and Wilson were successful in getting the board of directors in lockstep in hiring Goldman Sachs to assess a transaction and eliminate CFO William Quigley III last month.

Off-the-record sources told me shareholders wanted to put someone on the chopping block after poor stock performance, and Quigley took the blow instead of CEO Don Stebbins.

However, now Dowd and Wilson's efforts seem to be coming to head with Visteon's lighting and interiors on the market.

It's unclear whether any buyers are interested, but large supplier pockets remain deep, and many are waiting for market conditions to recover slightly before pulling the trigger on any deals. Analysts continue to call for a return of private equity in the market -- a strategic buyer could acquire the units and lump them with other acquisitions to form a larger supplier.

If Visteon successfully sold those units, it would have little or no business beyond Asia. Would Visteon keep its headquarters here? Probably not.

In September, Crain's Detroit Business, an affiliate of Automotive News, reported Visteon put its 880,000-square-foot headquarters in suburban Detroit on the market -- valued at roughly $80 million.

Early speculation is that the company was looking for a sale/lease-back scenario, but the possibility of an exodus is present.

At an investor conference in July, Stebbins said, "As we look out over the three-year horizon, I've said I'd be surprised if the product portfolio is the same as it is today."

Clearly, he's right. The next rumor to churn in the rumor mill: Would Stebbins remain the head of an Asia-based supplier?

No comment.

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