Visteon Corp. (VC - Snapshot Report) has announced a tender offer to purchase the remaining 30% of Halla Climate Control Corp. The company, which already has a 70% stake in Halla, will have a complete climate control portfolio following the acquisition, which, in turn will greatly enhance its shareholders’ value.
Visteon’s Korean subsidiary Visteon Korea Holdings Corp. has made an offer of KRW 913 billion ($805 million) for buying of the remaining 32 million shares of Halla. The offer is subject to shareholders tendering a minimum of 26.7 million shares for at least 95% ownership of Visteon.
The acquisition will improve Visteon’s business in the climate control segment with an efficient operating structure. Long-term plans of the company to have a global presence in the climate control of automotive will also have a favourable impact. In addition, Halla’s capability of developing advanced powertrain cooling technologies will back Visteon’s ongoing research and development initiatives in the U.S. and Germany.
Visteon also expects that the deal will boost its earnings by 25 cents per share excluding operational and tax synergies. The company anticipates roughly $20 million in synergies in the first full year of integration.
Visteon has further plans to expand its foothold in Korea with the establishment of the world’s largest compressor production unit. The expansion in the country will also lead to development of advanced technologies for radiators, condensers, evaporators and heater cores.
After acquiring a majority ownership of Halla from Ford Motor Co. (F - Analyst Report) in 1999, Visteon has been lending support to Halla to become a competitive global supplier with a sound reputation in Korea. However, the deal faces certain challenges from National Pension Service which holds about 10% of Halla’s share. Hyundai Motor Co., the biggest customer of Halla is also not very satisfied with the acquisition.
Visteon is one of the leading global automotive suppliers engaged in designing, engineering and manufacturing innovative climate, electronic, interior and lighting products for vehicle manufacturers. Currently, it retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) “Hold” rating.%