Johnson Controls profit up, to sell electronics unit

Thu Jul 18, 2013 9:15am EDT
 
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DETROIT (Reuters) - Johnson Controls Inc (JCI.N: Quote) posted a stronger-than-expected quarterly profit on Thursday and said it would sell part of its auto electronics business for about $700 million, sending its shares up 3.1 percent in premarket trading.

The sale of the HomeLink product line to Gentex Corp (GNTX.O: Quote) is expected to close around the end of September. Johnson Controls said it expects to announce the sale of the rest of the electronics business before its next earnings report.

Morgan Stanley analyst Ravi Shanker called the deal "a nice cherry on top of the quarter." Since HomeLink accounts for about half the electronics unit's total sales, the price on the deal is a good sign, given speculation that the entire unit would fetch $1 billion, he said.

Johnson Controls, the largest U.S. auto parts maker, said it separated HomeLink from the rest of the electronics business to get the best possible deal.

HomeLink, a vehicle-based system that allows drivers to remotely activate garage door openers, entry door locks, home lighting, security systems and other products, has been integrated into Gentex products for more than a decade.

Gentex, which makes automatic-dimming rearview mirrors and camera-based lighting and driver-assist systems, said the deal would boost its annual revenue by $125 million to $150 million.

In April, Johnson Controls said the potential sale of its auto electronics business was in the early stages. In March, it hired JPMorgan Chase & Co (JPM.N: Quote) to run the sale process.

People familiar with the process said last month that Johnson Controls was speaking with private equity firms about the business after interest from rival auto parts suppliers faltered.

Johnson Controls also makes car interiors and batteries, and heating, cooling and ventilation systems for buildings.   Continued...