UPDATE:ArvinMeritor To Reorganize Unit; May Sell It In Pieces
January 08 2009 - 2:35PM
Dow Jones News
ArvinMeritor Inc. (ARM), stymied in its bid to spin off its auto
parts business amid the sales slowdown, said Thursday it will now
reorganize the business and try to sell it off in pieces.
The company, which makes both commercial truck and automotive
parts, began taking steps in May 2007 to spin off the light-vehicle
unit to create two "financially strong" companies that would
attractive investors. That changed in October when ArvinMeritor
said it would rethink the move and try to sell the division given
the weakening economy.
ArvinMeritor also withdrew its 2009 first-quarter financial
guidance due to its change in strategy. The company had said it
expected to generate $50 million to $58 million from its continuing
operations before taxes and depreciation. It also expected sales of
$1 billion before special items.
Also Thursday, Chief Executive Officer Chip McClure said Phil
Martens, the former president of the light-vehicle unit, left the
company to pursue other opportunities.
Shares of ArvinMeritor recently fell 26 cents, or 7.3%, to
$3.32.
The company had been in talks to sell the entire light-vehicle
systems group, but determined it couldn't "capture the appropriate
value" by selling the whole business owing to tight credit markets
and weak sales volume, McClure said.
The unit will be reorganized into body systems, chassis systems
and wheels units. The company will continue to explore a sale for
the body-systems business and evaluate strategic options for the
chassis-systems unit, but expects to retain the wheels business, as
previously announced.
ArvinMeritor has been hurt by the continued drop in demand, tied
to the sinking fortunes of the U.S. auto industry. This week, in an
effort to conserve cash, it cut pay for about 100 senior
executives, include CEO McClure, effective Jan. 16. ArvinMeritor
has approximately 1,700 salaried employees in the U.S. and around
5,500 globally.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com
(Mike Barris contributed to this report.)
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