Last week news broke out about a planned split of the global automotive supplier Visteon Corporation, and now the effects of the rumored breakup ripple across the shareholder base.
According to sources that have knowledge of the plans, Visteon Corporation – a $4.7 billion company – is mulling the idea o splitting in two separate entities, as well as selling or branching out its electronics unit.
“People underappreciate how good” the technology in the electronics division is, according to Colin Langan, a New York-based analyst at UBS. If the unit “was available by itself, it becomes a much easier decision. Investor familiarity with the capabilities of Visteon’s electronics business isn’t necessarily that high,” he said.
Gabelli & Co. forecasts the electronics unit to be worth alone at least $2.6 billion if a sale goes through, with potential investors being Delphi Automotive or Harman International Industries.
Other analysts say the breakup could incur negative consequences as well – the electronics unit raising in valuation, with the other half – the climate business – steeply dropping and thus negating the value of the move.
Visteon reinforced its electronics side recently through the purchase of a Johnson Controls unit, while the sheer complexity of Visteon – which started as a company spin-off from Ford in 2000 – is enough to deter some of the investors.