* Buyout interest among rival auto suppliers has waned -
* Delphi was interested, but no longer pursuing a deal-
* Electronics unit may fare better under private equity-
By Soyoung Kim and Deepa Seetharaman
NEW YORK/DETROIT, June 17 Johnson Controls Inc
is speaking to private equity firms about selling its
roughly $1 billion automotive electronics unit, after buyout
interest from many rival auto parts suppliers faltered,
according to several people familiar with the matter.
The unit's performance was weaker than industry bidders had
expected, disappointing some interested parties and prompting
Johnson Controls to reach out to a broader group of buyers, the
people said. The company had not included private equity firms
earlier in the auction process, they added.
U.S. auto parts maker Visteon Corp and Huayu
Automotive Systems Co, a parts maker majority owned
by Chinese carmaker SAIC Motor Corp are among the
industry bidders still interested, the sources said.
Delphi Automotive had been part of the bidding
process until recently. Two sources said late on Monday that the
U.S. supplier is no longer pursuing a deal.
Representatives for Delphi, Huayu and SAIC did not
immediately reply to requests for comment. A spokesman for
Visteon declined to comment.
"Johnson Controls has been marketing its electronics
business for divestiture," the company said in a statement that
did not directly address the private equity talks. "We have
experienced strong interest from multiple strategic buyers. The
process is proceeding as previously outlined."
Johnson Controls, the diversified industrial conglomerate,
put its automotive electronics unit on the auction block earlier
this year to focus on its higher-margin businesses: building
controls, next-generation car batteries and car seating.
The inclusion of private equity buyers may be a sign that
the sale process is struggling, some of the sources said. But
one analyst said Johnson Controls' electronics unit may fare
better under private equity's wing rather than a supplier.
"Technologically, it could improve under private equity
because it would likely be more nimble and, depending how much
cash was put into it, potentially quite innovative," said IHS
Automotive analyst Mark Boyadjis.
Johnson Controls had sales of $1.4 billion in automotive
electronics for fiscal 2012. Like other suppliers, the company
has grappled with industry-wide pressure on margins, low vehicle
production in Europe and increased competition from China.
In October, the Milwaukee, Wisconsin-based company separated
its car seating from its interiors and electronics businesses,
saying that economic and competitive characteristics between
seating, interiors and electronics are "increasingly different."