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Cooper-Standard to Focus on Core Units With AVS Divestment

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Cooper-Standard Holdings Inc. (CPS - Free Report) has completed divesting the anti-vibration systems (“AVS”) business to Continental AG (CTTAY - Free Report) . At the sale price of $265.5 million, the deal includes divesting hubs in Auburn, IN; Mitchell, Ontario and Rennes, France. Further, the deal comprises AVS-related assets in Poland and China, and equity interest in India’s joint venture.

After considering deductions, owing to taxes and transaction-related fees and expenses, Cooper-Standard is expected to have net cash proceeds of approximately $220-$225 million. Apart from strengthening the balance sheet, the outstanding cash will support the company to reinvest in core product lines, in which it is competitively positioned and has better growth opportunities.

The divested unit offers a complete portfolio, consisting of anti-vibration systems and technologies, and products that alleviate vehicle NVH (noise, vibration and harshness) while improving ride and handling. The business employs roughly 1,000 people across hubs.

Cooper-Standard Holdings Inc. Price and Consensus

 

The Novi, MI-based, Cooper-Standard announced about the AVS unit’s divestment to Continental in November 2018. Its strategy was to sell off the AVS product line, which has an extensive presence in North America, to a company that will focus on expanding the business globally.

For the current year, the company expects sales to be $3.4-$3.6 billion. Further, divestitures and acquisitions are projected to impact yearly sales by $160 million or 4% compared with 2018. Still, the projected 2019 sales range is higher than the actual sales of $3.63 billion generated last year.

Shares of Cooper-Standard have underperformed the industry it belongs to in the past six months. Over the time frame, the company has lost 57.4% compared with the industry’s decline of 15.6%.

 


 

Zacks Rank & Stocks to Consider

Cooper-Standard currently carries a Zacks Rank #5 (Strong Sell) while Continental AG has a Zacks Rank #4 (Sell). A few better-ranked stocks in the broader auto sector are Geely Automobile Holdings Ltd. (GELYY - Free Report) and Ferrari N.V. (RACE - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Geely Automobile has an expected long-term growth rate of 7%. Over the past six months, shares of the company have gained 6.2%.

Ferrari has an expected long-term growth rate of 18.5%. The stock has gained 39.3% in the past three months.

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