Visteon Corp. (VC), the U.S. auto-parts maker with its stock at a post-bankruptcy low, is looking at acquisitions in climate and electronics with a goal toward boosting market share in both.
The company is considering acquisitions in those two product groups, and may try again to gain full ownership of South Korean joint venture Halla Climate Control Corp. (018880), Don Stebbins, Visteon’s chief executive officer, said in an interview yesterday. He said he doesn’t expect any new deals to close this year.
“We understand the strengths and weaknesses of each -- climate and electronics -- and we’re certain we can solve some of those through acquisition,” Stebbins said at the company’s headquarters in Van Buren Township, Michigan. “Absolutely they’re on the table. For the first time since I’ve been here at Visteon, we have a balance sheet that would allow us to do that.”
Stebbins, who led Visteon out of bankruptcy in 2010, has been trying to shed lower-margin revenue in interiors and lighting to focus on faster-growing operations in Asia. Its climate business, which suppliers heating and air-conditioning systems, is ranked No. 2 behind Denso Corp. (6902), the Aichi, Japan- based parts maker that is 23 percent owned by Toyota Motor Corp. (7203)
Visteon’s electronics business is ranked fifth, according to a 2011 investor presentation.
Visteon wants to diversify its customer base, so it would be unlikely to look for a climate company with Ford Motor Co. (F) or Hyundai Motor Co. (005380) as its largest customer, he said. Acquisitions would be the quickest way to gain share against Denso, he said.
“We’ve been very successful in terms of winning new business and winning new business outside of our traditional customer strengths,” he said. “That’s all been positive. I think that will continue, however it doesn’t change fast enough to really get to the Denso level. So acquisitions are an important piece of that.”
Visteon slid 0.7 percent to $28.42 in New York, the lowest closing price since leaving bankruptcy in September 2010. The shares have plunged 43 percent this year after dropping 33 percent in 2011.
Halla shares fell 5.7 percent to 25,850 won at the close in Seoul trading, the biggest decline since May 18. Shareholders were disappointed that Visteon did not specify any tender offer during the earnings report, said Nam Kyeong Moon, an analyst at KTB Investment & Securities Co.
Visteon lowered its annual forecasts yesterday, citing currency and declining vehicle production in Europe and other regions. Sales this year will be $6.6 billion to $6.8 billion, compared with a May forecast of as much as $7 billion. The average estimate of five analysts in a Bloomberg survey was for 2012 sales of $6.86 billion.
“I don’t think there is anything wrong with the strategy,” Stebbins said in the interview. “We will continue to move down that path.”
Visteon owns 70 percent of Daejeon, South Korea-based Halla, a publicly traded maker of vehicle air conditioners and heaters, and it tried to buy the rest. South Korea’s National Pension Service, which owns 8.1 percent of Halla, last week rejected the offer, squelching the deal. Visteon, which offered a 14 percent premium, needed approval representing 95 percent of Halla’s stock.
“The market expected more -- more immediate and detailed plans on the acquisition of Halla,” KTB’s Nam said by phone in Seoul. “Specifically, how Visteon plans to persuade the National Pension Service or what it could do to gain full ownership without the pension fund’s approval.”
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