(Adds details on transaction in paragraph 2)
NEW YORK May 18 Johnson Controls said
on Sunday that it has agreed to sell its auto interiors business
to a joint venture it is forming with a unit of China's biggest
automaker, SAIC Motor Corp.
A Johnson Controls spokesman said the auto parts maker was
contributing $3 billion in revenue to the joint venture, giving
it a 30 percent stake. The newly formed company will have total
value of $7.5 billion in revenue, he said.
The deal brings together Johnson Controls' auto interiors
business with Yanfeng Automotive Trim Systems Co. Ltd., a wholly
owned subsidiary of SAIC's component group, Huayu Automotive
Systems Co. Ltd.
Johnson Controls had said previously it was evaluating
strategic options for the unit, which had annual revenue of
about $4 billion but had been struggling to turn a profit.
A spokesman for Johnson Controls said the company is keeping
a "small portion" of the interiors business for itself, due to
existing customer relationships. Those facilities not included
in the agreement will continue to operate within Johnson
Controls' existing network as part of the company's Automotive
The deal, which is expected to close in the first half of
the 2015 calendar year, is a non-cash transaction comprised of
asset contributions by the two parties.
The new company will be headquartered in Shanghai.
Additional global engineering, development and customer centers
will be located in the United States, Europe, China, Japan and
The spokesman did not say whether the new joint venture
would mean that Johnson Controls, which has plants in the United
States and other parts of the world, would be closing down
manufacturing elsewhere in favor of China.
The new venture "aligns with Johnson Controls' corporate
commitment to China, which is increasingly becoming a major
center for the global automotive industry," the company's
chairman and chief executive officer, Alex Molinaroli, said in a
Shanghai-based SAIC also owns ventures with Volkswagen AG
and General Motors Co. SAIC reported a 12.6
percent rise in first-quarter earnings, helped by healthy sales
growth from the joint ventures.
(Reporting by Christian Plumb and Ashley Lau in New York;
Editing by Larry King)