DETROIT (Bloomberg) -- Visteon Corp., the bankrupt former auto-parts unit of Ford Motor Co., turned down Johnson Controls Inc.'s $1.25 billion offer for its interiors and electrics businesses, saying it would hurt the company's creditors.
The board voted unanimously to reject the unsolicited bid and work to emerge from bankruptcy as an independent company, Visteon said today in a statement. Johnson Controls, the largest publicly traded U.S.-based supplier, made the cash offer in May for Visteon units that posted $4.1 billion in 2009 sales.
“Johnson Controls has been pursuing this for quite a while,” David Leiker, an analyst with Robert W. Baird, said in an interview. “It's unlikely the Visteon board making this decision will make Johnson Controls go away.”
Visteon said the proposed takeover by Milwaukee-based Johnson Controls would accelerate some costs and wouldn't benefit its creditors and equity holders. Visteon, based in suburban Detroit, said the proposed takeover would probably delay its emergence from bankruptcy and asked Johnson Controls to stop talking to its customers about the proposed acquisition.
Visteon CEO Don Stebbins, in a letter to Johnson Controls CEO Stephen Roell, said he was "concerned that JCI's recent contacts with our customers and aggressive characterizations of your proposal could potentially damage our business and relationships with key customers."
"I assume these communications are occurring without your knowledge and ask that you personally see that such communications end.”
Shareholders and bondholders of Visteon, which filed for Chapter 11 in May 2009, are battling in court for the right to sponsor the company's reorganization plan. Both groups want to issue new stock to help the company pay down debt.
U.S. Bankruptcy Judge Christopher S. Sontchi in Wilmington, Del., last week put off a decision on whether to approve a plan for bondholders to buy 95 percent of the new stock until June 14. Sontchi agreed to give shareholders time to create a competing stock plan.
Under both proposals, bondholders would have the opportunity to buy a majority of the new stock issued, according to shareholder attorney Martin J. Bienenstock.
While under court protection from its creditors, Visteon has closed plants, fired workers and moved jobs out of the U.S.
A Johnson Controls spokeswoman was not immediately available for comment.
Besides interiors and electronics, Visteon also makes climate control systems.
Reuters contributed to this report.