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The Deal: Visteon Sells $1.25B Stake in Chinese JV

Tickers in this article: F VC

NEW YORK (TheStreet) -- Visteon surged 5.5% to $72.82 on news it's selling its 50% stake in a Chinese joint venture for $1.25 billion, continuing the auto parts manufacturer's effort to reshape its Asian portfolio.

Van Buren Township, Mich.-based Visteon said Tuesday it would sell its ownership of Yanfeng Visteon Automotive Trim Systems as well as direct interests in other related interiors joint ventures to partner Huayu Automotive Systemsknown as Hasco.

Visteon and Hasco also modified a separate electronics venture in China to allow Visteon to obtain majority control of Yanfeng Visteon Automotive Electronics.

Visteon said it expects cash payments of about $1.25 billion for the trim systems unit, and will pay about $70 million to gain control of the electronics entity. The deals are expected to be completed in multiple stages, with Visteon saying it expects to receive 90% of proceeds at or near closing.

The trim unit to be sold was established in 1994 as a joint venture between Ford Motors and Hasco parent Shanghai Automotive Industrial, and generated sales of about $7.2 billion in 2012. The electronics operation was established at the same time, and integrated into the trim business in 2002.

The deal continues a transformation of Visteon, the one-time auto parts unit of Ford that has been attempting to streamline its business to focus on higher-margin operations. The company in January agreed to consolidate much of its climate control system business inside 70% owned South Korean affiliate Halla Visteon Climate Control Corp., sell interiors and rework its electronics businesses.

Visteon CEO Timothy D. Leuliette said in a statement that the China deals announced Tuesday "support our focus on our core climate and electronics businesses and will bring significant benefits to Visteon, our customers and our shareholders." Leuliette said that proceeds from the sale will be used to fund share repurchase programs through the end of 2015.

The deal also "will strengthen our global electronics position" by consolidating the Chinese operations, Leuliette said.

Visteon was advised on the sales by Rothschild, Goldman Sachs and a Skadden, Arps, Slate, Meagher & Flom team including Shilpi Gupta, Jonathan Stone, Hal Hicks and Frederic Depoortere.

--Written by Lou Whiteman in New York