Ford Motor Co. will announce Thursday that it is separating its Visteon Automotive Systems parts unit in a distribution to shareholders, creating the world’s third-largest automotive supplier, peoplefamiliar with the plan said.
The world’s No. 2 automaker will detail the timing of its plan make Visteon a stand-alone company and specify the number of Visteon shares to be distributed for each Ford common share, the people said. The transaction would be structured similarly to the April 1998 spinoff of Ford’s Associates First Capital Corp. consumer finance unit, the people said.
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Ford plans to spin off Visteon, which makes parts ranging from air-conditioning systems to interior trim, so the unit can better compete for business from other automakers. Visteon had 1999 sales of $19.4 billion and as a separate company would rank behind Delphi Automotive Systems Corp. and Robert Bosch GmbH. “We’ve said all along that our goal for Visteon is independence,” said Jim Vella, a Ford spokesman. He declined to comment on Ford’s timetable for the separation or whether any announcements are planned for Thursday.
Buyback?
Ford officials have said previously that Visteon will become independent this year. Thursday’s announcement will come after directors hold a regularly scheduled meeting, the people said.
Ford rose 2 15/16, or 6.1 percent, to 51 1/16 today, partly on anticipation of a spinoff announcement, analysts said. The stock has fallen 16 percent in the last 12 months but have risen 24 percent from their 52-week low of 40 1/4 on March 8.
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By GlobalDataIn fact, the main interest among investors on Thursday may be whether Ford also authorizes a share buyback. Such a move has long been sought by investors and the chances of it happening now “has increased significantly” in recent days, said Lehman Brothers analyst Nick Lobaccaro in a recent note to clients.
The United Auto Workers union is expected to meet in a few days to create a separate bargaining unit for Visteon’s 24,000 blue-collar workers. Worker opposition to the spinoff dwindled when Ford agreed in October that workers in Visteon plants would remain Ford employees after the two companies are separated.
Delphi Automotive, the biggest parts-maker, was spun off by biggest automaker General Motors Corp. last year.
