Johnson Controls will explore a possible sale of its automotive business, a potentially significant shift in the industry's supply chain.
The supplier, which revealed the decision this morning, said it does not have a specific time frame for its "strategic review." The company said the outcome could involve a range of options, which it did not detail, for its seating business.
Johnson Controls also said it would evaluate growth options as an alternative.
"Today's announcement continues our strategy of proactive portfolio management to drive focus on strategic product-oriented businesses where we can be a global market leader, drive more profitable growth and deliver maximum long-term value for our customers and shareholders," CEO Alex Molinaroli said in a statement.
Theodore O'Neill, senior analyst at Ascendiant Capital Markets, said he's confident Johnson Controls will find a suitor for its automotive business. The seating business had $17.5 billion in annual revenue, according to a company presentation on the possible sale.
O'Neill estimated the business could sell for $20 billion to $40 billion, which would make it one of the largest deals of the year.
He said possible buyers could include auto supplier Lear Corp. or Chinese manufacturers.
"It's definitely going to happen. There's no question it's going to happen," O'Neill said in an interview. "The market's totally ripe for this because the car industry is doing OK."
Citi analyst Itay Michaeli said in a research note that the outcome of the sale process is "highly uncertain," but the decision is a welcome one.
JCI stock jumped 5% on the news in early trading Wednesday.
The company's announcement comes as the U.S. auto industry is flourishing, with widespread expectations that industry sales will top 17 million vehicles for the year.
Johnson Controls, often referred to as JCI, hired Goldman Sachs, Centerview Partners and Wachtell, Lipton, Rosen and Katz as advisers on the review.
Source: usatoday
The supplier, which revealed the decision this morning, said it does not have a specific time frame for its "strategic review." The company said the outcome could involve a range of options, which it did not detail, for its seating business.
Johnson Controls also said it would evaluate growth options as an alternative.
"Today's announcement continues our strategy of proactive portfolio management to drive focus on strategic product-oriented businesses where we can be a global market leader, drive more profitable growth and deliver maximum long-term value for our customers and shareholders," CEO Alex Molinaroli said in a statement.
Theodore O'Neill, senior analyst at Ascendiant Capital Markets, said he's confident Johnson Controls will find a suitor for its automotive business. The seating business had $17.5 billion in annual revenue, according to a company presentation on the possible sale.
O'Neill estimated the business could sell for $20 billion to $40 billion, which would make it one of the largest deals of the year.
He said possible buyers could include auto supplier Lear Corp. or Chinese manufacturers.
"It's definitely going to happen. There's no question it's going to happen," O'Neill said in an interview. "The market's totally ripe for this because the car industry is doing OK."
Citi analyst Itay Michaeli said in a research note that the outcome of the sale process is "highly uncertain," but the decision is a welcome one.
JCI stock jumped 5% on the news in early trading Wednesday.
The company's announcement comes as the U.S. auto industry is flourishing, with widespread expectations that industry sales will top 17 million vehicles for the year.
Johnson Controls, often referred to as JCI, hired Goldman Sachs, Centerview Partners and Wachtell, Lipton, Rosen and Katz as advisers on the review.
Source: usatoday
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