Johnson Controls says it won't sell seating unit

Visteon to buy electronics unit of Johnson Controls for $265M

Johnson Controls says it won't sell seating unit

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Visteon Corp. has agreed to purchase the automotive electronics business of Johnson Controls Inc. for $265 million in cash. The acquisition is expected to close in the second quarter of 2014.

The deal includes instrument cluster, infotainment, display and body electronics products. In September, Johnson Controls sold its HomeLink electronics unit to Gentex Corp. for $700 million.

The electronics business being acquired by Visteon generated $1.3 billion in revenue in the 2013 fiscal year, the company said in a statement on Monday. Visteon estimates that its new, enlarged electronics unit will have around $3 billion in sales annually.

Johnson Controls’ electronics business employs 4,800 people at seven r&d centers in Europe, North America and Asia. Five customers -- BMW, Honda, Renault-Nissan, PSA Peugeot-Citroen and Ford -- account for 72 percent of sales.

JCI pressures

Meanwhile, pressure has been mounting on Johnson Controls from Wall Street to also sell its automotive seat business, but CEO Alex Molinaroli dismissed the idea of the company exiting the business.

"I really consider our seating business as core, and I would see that as being core moving forward,” Molinaroli told The Wall Street Journal in a story posted on its Web site on Jan. 10.

Wall Street firm Baird Equity Research wrote on Monday that such a deal with "makes little sense."

"Near term (1-3 years), this is unlikely as it's challenging to argue JCI is 'multi-industry' with only two segments (batteries and building controls)," the report said. "Also, seating is well positioned to deliver free cash flow to transform the business and has meaningful revenue/margin opportunities."

Visteon Corp. is ranked No. 32 in the Automotive News list of the top 100 global suppliers, with retail sales of $6.86 billion in 2012. Johnson Controls is ranked No. 6 in the Automotive News list of the top 100 global suppliers, with retail sales of $22.52 billion in 2012.

You can reach Sean Gagnier at sgagnier@crain.com.


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