Delphi Automotive is to spin-off its Powertrain Systems segment into a new, independent publicly traded company, with the transaction expected to be completed by March next year.
The supplier says the convergence of technologies underpinning industry megatrends is driving greater demand for advanced electronics and increased computing power to meet consumer preferences for more safety, efficiency, and connectivity.
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At the same time, regulations for emissions and fuel economy are becoming increasingly stringent globally, requiring advanced engine management and electrification systems to enhance vehicle performance and meet customer demand.
“I do like the Delphi name,” said Delphi president and CEO, Kevin Clark in a conference call from the US. “We have created a lot of shareholder value for customers and shareholders. We think as a management team someone is going to have to have a new name.
“It would be fair to evaluate what the alternatives are and we will see. I quite frankly don’t have a preference one way or the other. After evaluating our product portfolio – if we spun out our powertrain business it would be [more] efficient to invest and grow. We think we can position this business as [a] separate, stand-alone business.
“Feedback from customers is positive – feedback from investors is positive as well. At a time of unprecedented industry change, the underlying strength of both our operating businesses and strategic partnerships will allow each company to focus sharply on its opportunities [and] continue to develop advanced technologies.”
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By GlobalDataAfter completing the transaction, Electrical/Electronic Architecture and Electronics & Safety businesses (E/EA and E&S) will remain in power distribution, centralised computing platforms, safety and autonomous driving systems, infotainment and user experience, vehicle connectivity and electrification, as well as data services.
Delphi’s Powertrain business currently supplies OEMs and aftermarket customers with 20,000 global employees, 5,000 engineers and revenues of around US$4.5bn in 2016.
“We – and the industry – believe the internal combustion engine is going to be around for along time,” added Clark. “If you look at what industry would like for 2025, internal combustion engines will make up 95% of powertrains.
“We believe there are all sorts of opportunities within the powertrain segment that enhance the efficiency of the internal combustion engine. In addition, our powertrain business has technologies today that play in the space of powertrain electrification.
“We are not running from the internal combustion engine. We are positioning our business to run to it and better serve our customers.”
Timothy Manganello, currently an independent director on the Delphi Board, will become non-executive chairman of the new Powertrain company’s board of directors on separation.
Manganello was most recently chairman of the Board and CEO of BorgWarner. Liam Butterworth, currently senior vice president and president, Powertrain Systems, will become president and CEO of the new entity.
The spin-off is expected to be completed by March 2018, subject to customary market, regulatory and other conditions.
