Visteon Corporation has signed a non-binding memorandum of understanding (MOU) for the sale of its Swansea, United Kingdom operation to Canadian-based auto parts manufacturer Linamar Corporation.
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The proposed sale is subject to due diligence, third party agreements, definitive documentation, anti-trust clearance and corporate approvals.
Visteon said he proposed sale of the Swansea facility, which its largest operation in the UK, would be “a significant milestone” in the plan to address non-core facilities and improve its financial performance.
The supplier recently disclosed that Visteon UK lost approximately $US110m on revenue of $540m during 2006.
The sale would would complete the company’s divestiture of its chassis business. Visteon previously exited its brake business, successfully transferred unprofitable business to lower cost countries, and significantly reduced its salaried workforce in the UK.
As part of the proposed transaction, which is expected to be completed by the end of the year, Visteon will transfer the manufacturing facility and associated assets, as well as contracts and certain intellectual property rights. The 400 UK employees are also expected to transfer to the new owner.
“When finalised, this proposed transaction will provide a viable alternative to closure for the Swansea facility, while enabling Visteon to achieve its business objectives,” said Steve Gawne, managing director of Visteon’s UK operations. “The Swansea plant will be a strong strategic fit within Linamar’s expanding driveline division.”
Visteon announced a three-year improvement plan in 2006, eyeing 30 underperforming and non-strategic operations. The proposed sale of Swansea is the 20th action announced as part of restructuring actions expected to generate annual savings of approximately $400m.
Nearly 60% of Visteon’s hourly manufacturing personnel are now in lower cost countries, compared with 48% at the end of 2005. By 2009, Visteon plans to have 75% of its manufacturing personnel and half of its engineering workforce in “cost-competitive” countries.
