Visteon to sell stake in Chinese jv and gain majority control in another

Global automotive components supplier Visteon is selling its 50% stake in Chinese joint venture Yanfeng Visteon Automotive Trim Systems to its partner Huayu Automotive Systems (Hasco) and will gain majority control of Yanfeng Visteon's Automotive Electronics (YFVE). Both transactions are valued at US$1.5 billion, with Visteon receiving US$1.2 billion for the portfolio of non-electronics operations.

Visteon's stake in YFVE will be valued at approximately US$300 million. The transactions, which are subject to customary government and regulatory approvals, are expected to be completed in multiple stages and substantially completed by June 2015. Visteon expects to receive 90% of the proceeds at or near initial closing.

"These transactions support our focus on our core climate and electronics businesses and will bring significant benefits to Visteon, our customers and our shareholders," said Timothy D. Leuliette, President/CEO of Visteon. "Selling the non-controlled YFV interiors business will generate significant cash that will allow us to return approximately US$1.2 billion in value to our shareholders through our share repurchase program from November 2012 through December 2015.”

He also added that the transactions will strengthen Visteon’s global electronics position by consolidating the majority of YFVE and its high-growth customer order book. Visteon will receive cash payments of approximately US$1.25 billion for the sale of its interests in YFV and other related interiors joint ventures, and will pay approximately US$70 million to gain control of the majority of YFVE. Approximately US$1.1 billion of the cash proceeds will be received at or around completion of the initial transactions, which is expected to occur before Dec. 31, 2013, subject to required approvals. The vast majority of the remainder of the cash proceeds will be received by June 2015.

In conjunction with the transaction, Visteon’s board of directors raised the authorisation of Visteon's remaining share repurchase programme to US$1 billion over the next two years, increasing by US$875 million the existing repurchase programme. Including repurchases since November 2012, this would increase Visteon's total completed authorised share repurchases to US$1.175 billion.

The transactions support Visteon's concentration on its core growth businesses – Halla Visteon Climate Control Corp., of which Visteon owns 70% and Visteon Electronics – both of which are industry leaders exhibiting higher-than-segment growth.

The YFV joint venture had 2012 revenue of approximately US$7.2 billion. YFV was established in 1994 between Ford and Shanghai Automotive Industrial Company (SAIC). Ford transferred the equity to Visteon in 2000 when Visteon became an independent company. SAIC transferred the equity to Hasco as part of a public listing in 2009. YFVE was formed in 1994 as a joint venture of Ford and Shanghai Auto Instrumentation and integrated into YFV in 2002.

(IMA)

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