Plymouth Township-based automotive seating supplier Adient and Yanfeng Automotive Trim Systems Co., headquartered in China, are restructuring their existing joint venture relationships to improve shareholder value.
First, Adient will sell its 30 percent ownership stake in Yanfeng Automotive Interiors in Harrison Township to Yanfeng for $379 million.
Second, Adient and Yanfeng will extend the term of their Yanfeng Adient Seating joint venture in Shanghai to Dec. 31, 2038, demonstrating Adient’s commitment to the partnership and the region, according to Adient.
Third, Adient will sell certain patents and other intellectual property exclusively used in its seating mechanisms business to Adient Yanfeng Seating Mechanism (AYM) for $20 million, and AYM will license such intellectual property back to Adient. Going forward, Adient and AYM also have agreed to license to each other certain other intellectual property related to the seating mechanisms business.
Finally, Adient and Yanfeng have agreed to amend the AYM joint venture agreement to update AYM’s business scope to allow AYM to carry out its seating mechanisms business both in and outside of China for both Chinese and non-Chinese customers.
“We value our strong relationship with Yanfeng,” says Doug Del Grosso, president and CEO of Adient. “These pending transactions expand that valuable strategic partnership while allowing Adient to continue to focus on our core business, further positioning us for long-term success.”
Del Grasso says Adient intends to leverage AYM’s expanded presence in the global seating mechanisms market as it continues to right-size its own metals business. The amended AYM joint venture agreement also will reflect certain governance changes such that Yanfeng will have consolidation rights of AYM’s financial results. Adient will continue to hold a 50 percent ownership interest in AYM.
The agreed transactions are cross-conditioned on each other and closing is subject to regulatory approvals and other customary closing conditions. Adient expects the transactions to be completed within its 2020 fiscal year.
Proceeds from the transactions are expected to be used by Adient to pre-pay a portion of the company’s debt and for general corporate purposes.
With 83,000 employees in 35 countries, Adient operates 220 manufacturing/assembly plants worldwide. From complete seating systems to individual components for OEMs, the company’s products are part of more than 23 million vehicles every year.