Tue, Dec 12, 2017 08:30 CET
(Stockholm, Sweden, December 12, 2017) – Autoliv, Inc. (NYSE: ALV and SSE: ALIVsdb), the worldwide leader in automotive safety systems, today announced that its Board of Directors has concluded its strategic review and decided to prepare for a spin-off of its Electronics business segment, creating a new, independent publicly traded company during the third quarter of 2018.
The analyses conducted under the strategic review concluded that the assumptions made at the time of the initial announcement in September 2017 to separate the Company hold true. Through the separation, additional value for shareholders and other stakeholders will be created by the ability to better address two distinct, growing markets with leading product offerings.
The key drivers for the separation include:
The different pace of technology advancement in the two businesses
Different skill sets of people throughout the organizations (leadership, engineering, sales)
Different Sales growth rates over the near and long-term with limited customer or operational synergies
Different market needs driving investments for growth and innovation (RD&E)
A potentially different shareholder profile due to the timing of returns
“With the strategic review concluded we now continue the process with full focus on a successful introduction of our two business segments as stand-alone companies during 2018. We are excited about the strategic opportunities for both our current business segments as separate companies”, said Jan Carlson, Chairman, President and CEO of Autoliv.
The spin-off will be effected by a payment of a dividend of the common stock of the new Electronics company on a pro rata basis to the holders of common shares (including through Swedish Depository Receipts) of Autoliv as of a yet to be determined record date.
As part of the preparation for the spin-off, the Electronics business is expected to receive a cash injection from Autoliv, with the underlying objective of Autoliv to remain strong investment grade. The intent is for the spin-off to be tax free to stockholders both in the US and Sweden. A Form 10 registration statement for the transaction will be filed with the Securities and Exchange Commission during the first half of 2018. It will include historical financial information for the Electronics business on a stand-alone basis for the fiscal years 2015-2017 and other details regarding the proposed spin-off.
After the spin-off, Autoliv’s current Passive Safety segment would continue to operate under the Autoliv name, with continued listings on the New York Stock Exchange and Nasdaq Stockholm. The Electronics business will assume a new company name to be announced at a later stage. It is also expected to be listed in the United States and Sweden. Both companies are to be headquartered in Stockholm, Sweden.
Forward looking full year 2018 indications for the stand-alone entities are expected to be given in connection with Autoliv’s Q4 2017 earnings release.
The spin-off is expected to be completed during the third quarter of 2018 subject to market, regulatory and certain other conditions, including approval by Autoliv’s board of directors. There can be no assurance regarding the ultimate timing of the spin-off or that the spin-off will ultimately occur. Further updates to the progress of the separation and stock market listing process will be provided in a timely manner.
Background
Electronics consists of Active Safety Products (automotive radars, cameras with driver assist systems, night vision systems and positioning systems), Restraint Control and Sensing and Brake Systems. Its market (particularly in active safety towards autonomous driving) is characterized by a high pace of change and growth which requires an agile innovation and partnering model as well as significant upfront investments to capture future growth. It is estimated that the total available market for Safety Electronics will grow from around $20 billion in 2017 to more than $40 billion in 2025. The objective for Electronics is to capture a significant portion of that growth while continuously improving the profitability of the unit.
Electronics is one of the leaders in Active Safety today with one of the broadest and most advanced product portfolios in the industry. Over the last two years Electronics has further positioned itself to be a major player in automotive electronics, including the competitiveness of the product portfolio, becoming a qualified supplier with a high number of OEM’s for active safety and entering into important partnerships with companies like Volvo Cars (Zenuity), NVIDIA and LiDAR experts Velodyne for the next generation of highly automated cars. In 2016, Electronics sales were $2.216 billion, with a target to reach $3 billion in revenue in 2020.
Passive Safety consists of airbag systems, steering wheels and seatbelts. Its market is characterized by stable growth and incremental innovation which requires the highest requirements on quality and manufacturing efficiency. It is estimated that the total available market for Passive Safety will grow from around $20 billion in 2017 to around $25 billion in 2025. During the same period Passive Safety is expected to outgrow the market and light vehicle production, which is expected to grow by close to two percent annually. The objective for Passive Safety is to remain the market and innovation leader while maintaining a high level of quality and capital efficiency and further improving its margin performance.
Passive Safety is the global market leader with a market share of 39% in 2016. Over the last 2.5 years Passive Safety’s share of order intake has been around 50% or more indicating significant market share expansion ahead. Standalone, Passive Safety will have increased freedom to further optimize its performance. In 2016 Passive Safety sales were $7.9 billion, with a target to reach more than $10 billion in revenues in 2020.
Inquiries:
Media
Thomas Jönsson, Group Vice President, Corporate Communications Tel +46 (0)8 5872 0627
Investors
Ray Pekar, Vice President Investor Relations Americas Tel +1 248 794 4537
Anders Trapp, Vice President Investor Relations Tel +46 (0)8 5872 0671
This information is information that Autoliv, Inc. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the Group VP of Corporate Communications set out above, at 08.30 CET on December 12, 2017.
About Autoliv
Autoliv, Inc. is the worldwide leader in automotive safety systems, and through its subsidiaries develops and manufactures automotive safety systems for all major automotive manufacturers in the world. Together with its joint ventures, Autoliv has more than 80 facilities with 70,000 employees in 27 countries. In addition, the Company has 22 technical centers in ten countries around the world, with 19 test tracks, more than any other automotive safety supplier. Sales in 2016 amounted to about US $10.1 billion. The Company’s shares are listed on the New York Stock Exchange (NYSE: ALV) and its Swedish Depository Receipts on Nasdaq Stockholm (ALIV sdb). For more information about Autoliv, please visit our company website at www.autoliv.com.
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