The Switzerland-based car parts and machinery maker Rieter AG said it would seek shareholder approval to split its automotive and textiles units into two different companies. The automotive unit will be called Autoneum while the textiles unit will continue as Rieter.
Currently known as Rieter Automotive Systems, the automotive division makes acoustic systems and floor carpeting used in the interiors of trucks and cars. According to Credit Suisse bank, the move will allow each unit to raise its own capital, make investments and expand its footprint.
Rieter recently announced the split when it reported a net profit in 2010 after two consecutive years of losses, with overall sales up 32 percent and a 64 percent increase in orders. Credit Suisse’s head of investment banking, Marco Illy, said the purpose of the demerger is to let the company have access to the capital markets to fund its future growth and improve its strategic flexibility.
UBS and Credit Suisse advised on the demerger, the first in Switzerland since 2009. Illy said institutional investors like market leaders in certain sectors, which could favor Autoneum, will be listed on the SIX Swiss exchange in mid-May 2011.
He said that there is a preference among auto investors to invest in focused players like Autoneum. There’s even more interest in sub-sectors like acoustic and thermal management that have fewer competitors.