BorgWarner, Visteon Rise After Auto Suppliers Announce Divestiture Plans

Visteon Corp. and BorgWarner (BWA) Inc. each rose more than 6 percent after the U.S.-based automotive suppliers announced plans to divest units.

Visteon rose 5.8 percent to $55.52 at 11:23 a.m. New York time, after touching $56.05, or 6.8 percent. BorgWarner gained 6.2 percent to $66.04 after reaching $66.33, or 6.7 percent. Before today, Visteon, a maker of car interiors and other parts, had plunged 29 percent this year, while BorgWarner, which makes turbochargers, had slid 14 percent.

BorgWarner and Visteon are moving to divest the units to concentrate on subsidiaries they say represent their main businesses. Visteon, spun off from Ford Motor Co. (F) in 2000, is narrowing its operations after exiting a 16-month bankruptcy last year.

Visteon today said it signed a memorandum of understanding to sell most of its interiors unit, which represented 29 percent of last year’s sales, to Yanfeng Visteon Automotive Trim Systems Co., a Chinese joint venture with SAIC Motor Corp. (600104)

A sales agreement may be reached in early 2012, Visteon said. If a transaction occurs, the company would no longer record revenue from the interiors unit.

Visteon, based in Van Buren Township, Michigan, has been shopping its lower-margin interiors and lighting units to focus on faster-growing operations in Asia, five people familiar with the sale process said in October.

Unit’s Profit Margin

Visteon received $2.16 billion of its $7.47 billion in revenue last year from the interiors unit, which is focused on Europe, Asia and South America. The unit’s gross margin was 6 percent last year, compared with 10.2 percent for Visteon as a whole, Visteon said in a July investor presentation.

BorgWarner said today it agreed to sell its tire-pressure monitoring unit to Huf Electronics GmbH, based in Velbert, Germany. Terms were not disclosed. The sale includes a factory in Bretten, Germany, where about 230 people work.

BorgWarner, based in Auburn Hills, Michigan, gained the unit in 2005 when it acquired Beru AG, a maker of starting systems for diesel engines. The company said the tire-pressure monitoring unit “departs from BorgWarner’s strong focus on powertrain technologies.”

The 24-member Bloomberg Americas Auto Part/Equipment Index has risen 5.9 percent today to 60.71.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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