Auto supplier and Chinese partner form $7.5B joint venture
An auto supplier with a large presence in the region and its Chinese partner are entering into a joint venture that will be the world’s largest supplier of automotive interiors.
Milwaukee-based Johnson Controls, which serves the automotive and building industries, and Yanfeng Automotive Trim Systems Co., Ltd. — a subsidiary of Huayu Automotive Systems Co., Ltd., the component group of Shanghai Automotive Industry Corporation — announced this week that they’ve signed a definitive agreement to form a global joint venture.
Johnson Controls said it could not speculate on how the joint venture may impact its 15 Michigan facilities.
The venture's product portfolio will include instrument panels and cockpit systems, door panels and floor consoles.
The agreement is a non-cash transaction comprised of asset contributions by the two parties that will create a company with revenues of approximately $7.5 billion.
Yanfeng will hold the majority 70-percent share in the joint venture, and Johnson Controls will have a 30-percent share.
The transaction is subject to limited conditions and is expected to close in the first half of the 2015 calendar year.
The company will be headquartered in Shanghai with global engineering, development and customer centers in the U.S., Europe, China, Japan and India.
The agreement excludes certain facilities in the companies' existing networks. Johnson Controls will continue to operate those within its network as part of Johnson Controls' Automotive Experience division.
"Commitment to China"
Yanfeng and Johnson Controls have had an automotive seating partnership for the past 15 years. Johnson Controls said the new venture is a natural extension of their partnership.
“It creates a strong combined company with a market-leading position and a foundation for sustained global growth," said Alex Molinaroli, chairman and chief executive officer, Johnson Controls. "This also aligns with Johnson Controls' corporate commitment to China, which is increasingly becoming a major center for the global automotive industry."
Johnson Controls announced in January the sale of its automotive electronics business to Visteon Corp. for $265 million. The company had previously announced its plans to move away from automotive electronics as part of its broader strategy to focus on core businesses and re-allocate capital to further diversify its portfolio and maximize shareholder value. The Visteon sale completed that divestiture.
"The sale of our electronics business is proceeding as planned,” said Fraser Engerman, a spokesperson for Johnson Controls. “Our joint venture with Yanfeng is separate and does not impact the sale of our electronics business to Visteon.
“Our strategy is to become a true global, multi-industrial company. Our recent acquisitions and divestitures align with this strategy, as we continue to invest in our non-automotive businesses, while retaining our automotive seating business as core to our company.”