Visteon is selling its 70% Halla Climate unit stake for $3.6 billion

Article by Christian A., on December 19, 2014

Visteon Corp. has reached an agreement to sell a 70-percent stake in Halla Visteon Climate Control Corp. to Hankook Tire Co. and private-equity partner Hahn & Co. for $3.6 billion, as it bids to concentrate on connected-vehicle solutions and cockpit electronics. In 2013, Visteon sold its climate business to Halla Climate Control in 2013, but retained a stake.

Visteon is focusing on connected cars, as it tries to take advantage of the fact that 39 percent of car buyers consider in-vehicle technology as the top selling point, according to an Accenture study.

Gregory Coppola, managing director of Alderney Advisors, told Bloomberg in an interview that suppliers are trying to focus on the higher margin parts, noting that climate control is not a high-margin part on a long-term basis – which could the reason behind Visteon’s decision to sell its stake in Halla Visteon.

Shin Chung Kwan, an analyst at KB Investment & Securities Co., remarked to Bloomberg that that transaction acquire Visteon’s stake was as a “win-win” situation for both Hankook and Halla Climate.

The deal represents an enterprise value for Halla Visteon of around 10.1 times earnings before interest, taxes, depreciation and amortization (EBITDA), for the 12 months ended Sept. 30, according to a statement by Visteon.

The agreement is expected to be finalized in the first half of 2015 pending regulatory review. Visteon is also considering splitting itself in two.

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