By Jeff Bennett
Auto supplier Delphi Automotive PLC (DLPH) on Thursday confirmed
it agreed to sell its automotive heating and cooling business to
German competitor Mahle GmbH for about $727 million in a move that
caps several years of refashioning the old-line U.S. parts maker to
a more narrowly-focused technology company.
Delphi also reached a separate deal to sell its Shanghai Delphi
Automotive Air-Conditioning System Co. to Mahle. The financial
terms of that deal weren't immediately clear, although Delphi said
the proceeds will be in addition to the $727 million paid for the
other business.
The Wall Street Journal, citing people familiar with the matter,
had reported Wednesday that Delphi reached the agreements with
Mahle.
The sale of Delphi's thermal-systems unit, representing about
$1.6 billion in annual sales, will include 13 manufacturing sites
in eight countries employing about 6,700 full-time employees.
The divestiture, which is expected to close in the third
quarter, is the latest in a series of moves that Gillingham,
U.K.-based Delphi has taken to narrow its focus to drive research
and development into higher margin product areas--such as fuel
cells and navigation systems where it believes it can have a
strategic advantage. Cash from the Mahle deal could further boost
that portfolio, the people told The Journal.
Once the world's largest auto-parts suppliers, selling
everything from steering wheels to brake pads, Delphi has slimmed
down to concentrate on products where management believes Delphi
can be a leader, specifically in the areas of fuel economy, active
safety and self-driving technologies.
For Mahle, the purchase is a strategic move to bolster its Behr
GmbH & Co. KG business. Stuttgart-based Mahle took control of
Behr, which makes heating and cooling systems, in May 2013, when it
became the majority shareholder in the company. Behr is the
fourth-largest player in the thermal space followed by Delphi.
Japanese parts maker Denso Corp. is the leader.
Delphi's thermal-systems business provides cooling, heating and
air-conditioning systems to almost every global auto maker. The
unit contributed $1.56 billion, or 9% of Delphi's overall sales
last year. Delphi, which operates its North American offices out of
Troy, Mich., posted a 2014 profit of $1.44 billion and $17.02
billion in sales.
-Michael Calia contributed to this article.
Write to Jeff Bennett at jeff.bennett@wsj.com
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