Johnson Controls in unit sales talks with private equity firms

Article by Anita Panait, on June 19, 2013

Johnson Controls Inc. is holding talks with private equity firms over selling its automotive electronics unit, after buyout bids from rival suppliers collapsed, several people familiar with the matter told Reuters. Parties interested in acquiring the unit became disappointed with the unit after it failed to perform as the industry bidders expected.

This prompted Johnson Controls to hold talks with a broader group of buyers, sources told Reuters, noting that the company had not included private equity firms earlier in the auction process. The sources added that US auto parts makers Visteon Corp. and Delphi Automotive are still interested in acquiring Johnson Controls’ automotive electronics unit, which is valued at around $1 billion.

Huayu Automotive Systems Co. is also interested in buying the unit. In an e-mail sent to Reuters, Johnson Controls said it has been marketing its electronics business for divestiture, adding that it has received strong interest from multiple strategic buyers.

The company said the sales process is “proceeding as previously outlined." Johnson Controls started looking for a buyer for its automotive electronics unit earlier this year to concentrate on its higher-margin businesses, which includes building controls, next-generation car batteries and car seating.

Some of Reuters’ sources remarked that the inclusion of private equity firms could be a sign that the sale process is struggling. IHS Automotive analyst Mark Boyadjis quipped to Reuters that Johnson Controls's automotive electronics unit may do better under a private equity rather than a supplier. He said that technologically, the unit could improve under private equity since it could become more nimble and potentially quite innovative. [source: yahoo]

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