Halla Climate Control Corp. (018880) agreed to buy Visteon Corp. (VC:US)’s automotive climate units, consolidating Visteon’s businesses within Halla, a South Korean supplier of which the U.S. company owns 70 percent.
Visteon said in September it planned to sell its climate business to Halla Climate Control for cash, creating the Halla Visteon Climate Control Corp., which will be the second-largest maker of heating and air conditioning systems for automobiles. Visteon said today the price was $410 million (436 billion won).
Halla Climate, the Daejeon, South Korea-based maker of car air-control systems, will purchase Visteon’s climate businesses in countries including China, India and Japan. Tim Leuliette, Visteon’s chief executive officer, has said combining the operations will make the new company “predator, not prey” in the industry.
“This is a good strategic move for Halla,” Kim Yoon Ki, a Seoul-based analyst at Mirae Asset Securities Co., said in a telephone interview. “The merger will create a synergy effect which will lead to cost reduction, and lure new customers.”
Visteon, based in Van Buren Township, Michigan, said the transaction should be completed this quarter. The combined business will have operations in 17 countries, including 32 factories, five global technical centers and seven regional customer centers.
Visteon rose 1.1 percent to $54.77 at the close in New York.
Customers have wanted the businesses of Visteon and Halla Climate put together for more than a decade, and the transaction won’t be subject to a shareholder vote, Leuliette said at an investor conference in Boston in September.
Leuliette was named CEO on Oct. 1 after serving as interim chief following the ouster of Don Stebbins Aug. 10. The new chief was part of a bloc of Visteon directors who favored revamping the company, which hasn’t been able to generate consistent profits under three CEOs before Leuliette. Visteon surged 40 percent from Aug. 10 through yesterday.
Visteon failed in July to buy the remaining 30 percent of Halla Climate after South Korea’s National Pension Service, which owns 8.1 percent, rejected its bid. The auto-parts supplier, spun off from Ford Motor Co. (F:US) in 2000, has tried to shed lower-margin units to focus on faster-growing Asian operations.
Halla Climate’s latest announcement clouds Halla Group Chairman Chung Mong Won’s ambitions to rebuild the group, which sold units after going bankrupt in 1997. Mando Corp. (060980), the group’s biggest unit, said in August it may offer to buy Visteon’s 70 percent stake in Halla Climate.
“For Mando, this means its target has become bigger and pricier,” said Mirae’s Kim.
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