Automotive technology specialist Veoneer said it would exit the brake control business and signed a non-binding agreement with a “well established automotive supplier” to sell its yet to be launched US brake control programmes.
Following a strategic review launched in April 2019, the supplier decided to focus on its core electronics business and exit brake control.
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It is focused on safety hardware and software and plans to further strengthen this core product line and continue to build on its claimed leading position.
Veoneer expects the sales to achieve total reductions of negative cash flow of around US$80m for 2020 and 2021 as the programmes are in investment and ramp up phases ahead of major production launches.
The sale to the automotive supplier follows the completion of the sale of the Asian portion of the brake control business (VNBS) on 3 February, 2020.
The new company will take over the entire team and the agreed purchase price is $1.
Veoneer will incur a non cash write down of net assets related to VBS with a negative net income effect to Veoneer of approximately $144m in the first quarter of 2020.
The write down will not affect cash flow, financial targets or the electronics business plan.
The total net income effect from the brake control segment sale, including both VNBS Asia and the US operations, is expected to be negative by approximately $65m as the VNBS Asia transaction resulted in a gain of $77m.
Veoneer will retain a minor legacy brake control business in the US with total expected lifetime sales of around $70m.
The final agreement is expected to close during this second quarter of 2020.
