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Wednesday, 10 June 2015 15:15

Johnson Controls to explore sale, spin off of remaining automotive division

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Slim Seat concept from Johnson Controls. Slim Seat concept from Johnson Controls. COURTESY PHOTO

Milwaukee-based Johnson Controls Inc. (NYSE: JCI) may shed the remainder of its $22 billion automotive business.

The Tier 1 supplier announced its plans to explore “strategic options” for spinning off or selling both its automotive seating and automotive interiors division in a statement and a conference call with analysts today.  

Johnson Controls hasn’t disclosed how the decision announced today may impact its remaining automotive centers in Holland. However, it’s highly unlikely that the move will disrupt the company’s battery business – it manufactures lithium-ion batteries at the Holland-based Meadowbrook plant – despite the close ties with the automotive business, Chairman and CEO Alex Molinaroli said in the call with analysts.

“(Spinning off the battery business is) not something that we even think or talk about,” Molinaroli said. “I don’t even see that as a possibility. … Our battery business we see as a strong platform to continue to grow beyond today.”

Johnson Controls’ move to spin off its remaining automotive business units stemmed from an internal decision to cease investment in that area to give the company more flexibility for future growth, Molinaroli said.

“It came to us that there was more growth opportunity in our seating business than we were willing to make,” Molinaroli said.

The company has yet to establish an investment plan from the profits of the sale, should it occur, executives said. Johnson Controls’ automotive business accounted for more than 50 percent of the company’s revenues in 2015.

“I’m excited for our seating business because they deserve the opportunity to be invested in,” Molinaroli said.

Exploring a potential sale for the automotive seating business follows a string of acquisitions in recent years that JCI completed to bolster its capabilities for the division. They included Keiper seating mechanisms, Recaro’s specialty seats, C. Rob Hammerstein metal seat components, and Michel Thierry SA seat fabric and leather.

The move follows two years of divestitures for JCI.

In 2013, the company said it planned to return its focus to the core seating business as it sold off its HomeLink division to Zeeland-based Gentex Corp. It divested its automotive electronics business to Visteon and spun off its automotive interiors business to a joint venture it set up with Yanfeng Automotive Trim Systems Co. Ltd. of China.

Last year, the company also sold its sun visor, headliner and overhead systems business to Motus Integrated Technologies LLC, a private equity-backed firm.

Read 3601 times Last modified on Sunday, 28 June 2015 18:04

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