Halla Gains on Plan to Buy Visteon’s Climate Units: Seoul Mover

Halla Climate Control Corp. (018880) rose in Seoul trading after deciding to buy majority shareholder Visteon Corp. (VC)’s automotive climate units to combine the businesses and make them more competitive.

Halla Climate, a maker of car air-control systems and components, climbed 2.3 percent to 22,400 won at the close on the Korea Exchange, the highest level since Jan. 2. The Kospi index fell 0.5 percent.

The auto components maker will purchase Visteon’s climate businesses in countries including China, India, France, Netherlands, Mexico, and the U.S., for a total of at least 410 billion won ($388 million), according to regulatory filings by the Daejon, South Korea-based company. The deal will create the second-biggest supplier of auto climate components and systems in the industry, Visteon said in a statement on its website yesterday.

“The price of the deal seems reasonable and shouldn’t be a burden to Halla Climate’s financial structure,” Yim Eun Young, an analyst at Dongbu Securities Co. wrote in a report today. “The deal will lead to customer diversification, global network establishment, and improvements in the company’s efficiency.”

‘Predator not Prey’

Visteon plans to sell its climate businesses to Halla Climate for cash, creating a combined entity called Halla- Visteon Climate Group that will be “predator not prey” in the industry, Tim Leuliette, Visteon’s chief executive officer, said at an investor conference in Boston in September.

Customers have wanted the businesses of Visteon and Halla Climate put together for more than a decade, and the transaction won’t be subject to a shareholder vote, he said.

“Approval of the agreement by Visteon’s board of directors and entry into the final agreement are expected soon,” Van Buren Township, Michigan-based Visteon said in a statement on its website. The auto parts maker, which will continue to own 70 percent of the company created by the deal, said the transaction is on track to be completed in the first quarter of 2013.

Visteon failed in July to buy the remaining 30 percent of Halla Climate after South Korea’s National Pension Service, which owns 8.1 percent, rejected its bid. The U.S. company, spun off from Ford Motor Co. (F) in 2000, has tried to shed lower-margin units to focus on faster-growing Asian operations.

Halla Climate’s acquisition announcement clouds Halla Group Chairman Chung Mong Won’s ambitions to rebuild the group, which sold units after going bankrupt in 1997. Mando Corp. (060980), the group’s biggest unit, had said in August it may offer to buy Visteon’s 70 percent stake in Halla Climate.

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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