Delphi Said to Seek $1 Billion Sale of Thermal UnitDavid Welch
Delphi Automotive Plc, the former parts unit of General Motors Co., is exploring a sale of a business that makes heating and cooling systems for cars, and will seek as much as $1 billion for the unit, people with knowledge of the matter said.
Delphi, which is working with a financial adviser on the sale, has approached companies including France’s Valeo SA and Halla Holdings Corp. of South Korea about buying the unit, the people said, asking not to be identified discussing private information. While it’s unclear at this point if either company will bid, Delphi’s management is planning to meet with potential buyers this week, the people said.
U.S. companies are spinning off underperforming or undervalued businesses at a record pace this year, with 175 such transactions announced so far, data compiled by Bloomberg show. Another parts maker, Visteon Corp. is exploring a plan to split into two companies, one focused on electronics and the other on climate controls, people familiar with the matter said in September.
Delphi spokeswoman Claudia Tapia declined to comment on the unit sale, as did Fabienne de Brebisson at Valeo. Jim Fisher, a spokesman for Halla Visteon Climate Control, which is Halla’s climate business, said the company wants to grow its business while declining to comment on the Delphi unit.
At Delphi, revenue from thermal systems has been declining in recent years, and accounted for about 9 percent of last year’s sales of $16.5 billion, data compiled by Bloomberg show. The unit generated $80 million in adjusted earnings before interest, taxes, depreciation and amortization of $71 million in 2013, the data show.
Delphi’s shares have gained 9 percent the twelve months through yesterday, giving it a market value of about $19.5 billion. The company, which was spun off from GM in 1997, is now domiciled in Kent, U.K., but retains extensive operations in Troy, Michigan, a Detroit suburb.
Delphi could use cash from the sale for acquisitions to bolster its core areas including electronics, safety systems or engines and transmission technologies, the people said.