MEXICO CITY -- Mexican conglomerate Alfa said on Friday it plans to spin off the entirety of its remaining 75 percent stake in auto supplier Nemak.
If shareholders approve the proposal at an Aug. 17 meeting, they would receive one share of Controladora Nemak for each of their Alfa shares. They would also retain share ownership in Alfa's equity.
"We plan a gradual and orderly transition process to make Nemak an independent business," Alfa President Alvaro Fernandez Garza said in a statement.
Controladora Nemak would be listed on the Mexican stock exchange following the spinoff, Alfa said. Nemak, which began to trade publicly in 2015, would continue to be listed as a separate entity. Nemak shareholders in the future would be able to decide whether to merge with Controladora Nemak, Alfa said.
Nemak, which makes aluminum components for automakers including Ford, General Motors, Fiat Chrysler Automobiles and Toyota, saw second-quarter results severely hit by shutdowns of light-vehicle production due to the coronavirus crisis.
The company posted a $125 million loss compared with net profit of $42 million the year before, while revenue shrank 60 percent from year-earlier period to $403 million -- making it the worst-performing of Alfa's publicly-traded companies.
Mexican bank Banorte said investors were likely to cheer the separation of Nemak's risk from its parent company.
Alfa also owns 82 percent of petrochemicals company Alpek and 53 percent of telecommunications provider Axtel . It is also the owner of food products business Sigma, and oil and gas unit Newpek.
The company said this month it will complete the sale of the majority of Newpek's U.S. assets before the end of 2020.