Autoliv says it will prepare for a spin-off of its Electronics business segment, creating a new, independent publicly traded company during the third quarter of next year.

The analyses conducted in review concluded the assumptions made at the time of the initial announcement in September last year to separate the company hold true. Through the separation, additional value for shareholders and other stakeholders will be created by the ability to better address two distinct, growing markets.

The key drivers for the separation include:

  • The different pace of technology advancement in the two businesses
  • Different skill sets of people throughout the organisations (leadership, engineering, sales)
  • Different sales growth rates during the near and long-term with limited customer or operational synergies
  • Different market needs driving investments for growth and innovation (RD&E)
  • A potentially different shareholder profile due to the timing of returns

"With the strategic review concluded we now continue the process with full focus on a successful introduction of our two business segments as stand-alone companies during 2018," said Autoliv president and CEO, Jan Carlson.

"We are excited about the strategic opportunities for both our current business segments as separate companies."

The spin-off will be effected by a payment of a dividend of the common stock of the new Electronics company on a pro rata basis to the holders of common shares (including through Swedish Depository Receipts) of Autoliv as of a yet to be determined record date.

As part of the preparation for the spin-off, the Electronics business is expected to receive a cash injection from Autoliv, with the underlying objective of the Swedish supplier to remain strong investment grade.

The intent is for the spin-off to be tax free to stockholders both in the US and Sweden. A Form 10 registration statement for the transaction will be filed with the Securities and Exchange Commission during the first half of 2018. It will include historical financial information for the Electronics business on a stand-alone basis for the fiscal years 2015-2017 and other details regarding the proposed spin-off.

After the spin-off, Autoliv's current Passive Safety segment would continue to operate using the Autoliv name, with continued listings on the New York Stock Exchange and Nasdaq Stockholm.

The Electronics business will assume a new company name to be announced at a later stage. It is also expected to be listed in the United States and Sweden. Both companies are to be headquartered in Stockholm, Sweden.

Forward looking full year 2018 indications for the stand-alone entities are expected to be given in connection with Autoliv's Q4, 2017 earnings release.

The spin-off is expected to be completed during the third quarter of 2018 subject to market, regulatory and certain other conditions, including approval by Autoliv's board of directors.

There can be no assurance regarding the ultimate timing of the spin-off or that the spin-off will ultimately occur, noted the supplier.