Visteon Corp. shares rose the most in more than nine months after the auto-parts supplier said it will sell its stake in a Chinese venture for $1.25 billion to focus on its automotive climate-control and electronics units.
Shares of the Van Buren Township, Michigan-based company rose 6.7 percent to $73.61 at the close in New York, the biggest one-day increase since Nov. 1. The stock has gained 37 percent this year, compared with a 19 percent increase in the Russell 1000 Index.
Visteon said it will sell its half of an automotive interior venture to partner Huayu Automotive Systems Co. along with other interior assets for $1.25 billion. The supplier also will pay $70 million to Huayu to gain majority control of Yanfeng Visteon Automotive Electronics Co. The deals will probably be completed by June 2015, Visteon said in a statement.
“You want to get out of the commodity businesses and be in those where there’s some sort of proprietary technology,” Kevin Tynan, a Bloomberg Industries auto analyst in Skillman, New Jersey, said in a phone interview. “That’s where you can protect margins and protect prices a little bit better.”
Visteon will use most of the proceeds to buy back stock until the end of 2015, Chief Executive Officer Tim Leuliette said in the statement.
Visteon, spun off from Ford Motor Co. in 2000, has tried to dispose of lower-margin units to focus on faster-growing Asian operations after exiting bankruptcy in 2010. Leuliette, 63, formerly part of a bloc of Visteon directors who favored revamping the company, became CEO last year after the company failed to generate consistent profits.
Huayu Automotive is a unit of Shanghai Automotive Industry Corp., parent company of SAIC Motor Corp., China’s biggest automaker.
“They’re marching down the path of simplifying the structure of this company,” said Matthew Stover, a Boston-based auto analyst with Guggenheim Partners, who rates Visteon as a buy. “What they’ve decided to be core to them is their electronics business.”
Rothschild Inc., Goldman Sachs Group Inc. and Skadden, Arps, Slate, Meagher & Flom LLP advised Visteon.