Visteon's boardroom tumult: Connecting all the dots
Late last year, I blogged about whether Visteon would jump the Pacific to Asia. Today, we still don't know for sure, but the pieces are falling into place.
Today, the supplier announced Don Stebbins, 54, was out as CEO, replaced on an interim basis by former Dura Automotive CEO and current Visteon board member Tim Leuliette, 62.
The shakeup is happening amid rumors that Korean supplier Mando Corp. may attempt to acquire Visteon's lucrative climate control business. The rumors helped fuel a rally in Visteon stock today (up 8.3 percent at closing time).
In July, Visteon announced it offered $805 million to acquire the remaining 30 percent stake in its Korean joint venture, Halla Climate Control Corp. But that deal was nixed after the country's National Pension Service rejected the offer.
Then earlier this month, Visteon lowered its annual sales forecast, citing currency and declining vehicle production in Europe and other regions, Bloomberg reported. Sales this year will be $6.6 billion to $6.8 billion, compared with a May forecast of as much as $7 billion, according to the report.
Leuliette has significant experience in the Asian market, including his China-centric investment firm Andus-Leuliette LLC. A year ago, Hong Kong-based China Auto Parts and Accessories Capital Holding Ltd. acquired the stake previously held by The Tempo Group Inc., a Beijing auto supplier.
He also leads Bloomfield Hills-based banking firm Finnea Group LLC.
Leuliette was hired on to lead supplier Dura Systems in 2008 after it emerged from bankruptcy and led its sale to New York-based private investment firm Patriarch Partners in 2010.
As Stebbins walked out the door, effective Aug. 10, the Visteon board immediately added two new board members, one to replace Stebbins and another to raise the membership to eight.
The new members include former Eagle-Picher CEO David Treadwell and Francis Scricco, senior vice president of manufacturing, logistics and procurement for Avaya Inc. until his retirement in October 2008
Treadwell has deal-making experience as well. He led the supplier out of bankruptcy in 2006 as COO and pared off several of its divisions upon becoming CEO later that year.
Speculation is already spreading that with Mando on the hunt, Visteon could be primed for a deal.
If Mando makes an offer for the climate business and the Visteon board decides to bite, Visteon will be left with a near $2 billion-a-year interiors business after it terminated an agreement to sell the remainder of its interiors business to its China joint venture Yanfeng Visteon Automotive Trim Systems Co. The company originally announced the deal last November.
It's unclear what would then happen with the interiors business, but it may leave an open window for competitors such as Johnson Controls, Magna International or Lear.
JCI offered $1.25 billion to acquire Visteon out of bankruptcy in May 2010 (the deal was immediately rejected by Visteon management).
Visteon sold its lighting unit to India-based Varroc Group for $92 million earlier this year.
The company reported a second-quarter net income of $75 million, after two consecutive quarterly losses. Visteon has been plagued by unprofitability since Ford Motor Co. spun off the supplier in 2000. Visteon reported a net income of $1 billion in 2010 after shedding $1.2 billion in debt through Chapter 11.
Stebbins fell on his sword trying to hold Visteon together. Only time will tell if Leuliette and his team are determined to dissolve the supplier through a set of deals.
Until then, Korea's Mando remains on the prowl.
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