Johnson Controls Inc (NYSE:JCI) is thinking of a different overthrow options for its automotive business. The segment marks the biggest of the company’s total three businesses. The company was once known for its automotive parts in the U.S automotive industry, but that fame was trimmed by other notable companies.
Chief Executive Officer Alex Molinaroli said during a conference call that the firm’s automotive business will be cut off from the company’s operations possibly by a joint venture, a sale or a spinoff. The company hasn’t given any specific timeline of that shedding program and appointed Goldman Sachs Group Inc. and Centerview Partners as financial advisers, based on the company’s statement.
The automotive segment’s revenue accounted for the 51 percent of the total revenue gained by the firm in last fiscal year, with contributing only 31 percent to net operating profit. The firm’s automotive unit specializes in seats, instrument panels and door systems. However the company’s battery unit isn’t included in the pruning list. The Milwaukee-based company’s third division provides services to building systems.
Most likely interested buyers are Magna International Inc. and Faurecia, and the automotive division is worth more than $9 billion, according to Brian Sponheimer, a Gabelli analyst in Rye, New York. In Sponheimer opinion the company’s unit is highly valuable and he recommends purchasing Johnson Controls shares.
“This is a business that, for the better part of its history, has had a number of disparate assets with strong positions in their markets,” Sponheimer said. “This decision makes a much cleaner company to understand and attracts a buyer willing to pay a higher multiple.”
Molinaroli said in the statement that the automotive-business review “continues our strategy of proactive portfolio management to drive focus on strategic product-oriented businesses where we can be a global market leader, drive more profitable growth and deliver maximum long-term value for our customers and shareholders.”
In addition to Goldman Sachs Group Inc. and Centerview Partners the firm also appointed Wachtell, Lipton, Rosen & Katz as legal advisers for the evaluation.
