Talks are ongoing between Visteon Corp. and India-based Varroc Group over the sale of its automotive lighting business, according to three sources. Visteon is attempting to sell two of its four auto parts-making units. Two sources said that a deal may be reached at the end of February at the earliest. It’s still possible though that discussions will break down.
They also said that this unit, which is the smallest Visteon unit, could fetch $75 million to $100 million. They said that it could get a net worth of $150 million, so Visteon may have to take a noncash writedown related to the sale.
These talks are part of the management's plan for the one-time Ford Motor Co. parts unit, which emerged from a 16-month bankruptcy in 2010, to reduce lower-margin revenue in interiors and lighting to focus on the operations in Asia that are growing far quicker. Varroc is a supplier of parts for passenger and commercial vehicles and motorcycles and is based in Aurangabad, India.
Its Web site stated that some of its customers are Honda Motor Co., Yamaha Motor Co., Fiat S.p.A., General Motors Co., Caterpillar Inc. and Visteon. Visteon's lighting unit is the sixth-largest in the world with $456 million in consolidated revenue in 2010.
This entire market is valued at around $9.5 billion. In a July presentation, the company said that North America and Europe account for around 81% of the revenue. From the presentation, we also learned that this unit’s gross margin, which calculates gross profit as a percentage of revenue, is 2.6%. [source: Autonews]