ArvinMeritor, Inc. today announced that its board of directors has approved a plan to spin off its Light Vehicle Systems (LVS) business to ArvinMeritor shareholders, with the Commercial Vehicle Systems (CVS) business remaining with ArvinMeritor.
"The plan to separate our two businesses is the result of a comprehensive strategic review to enhance the company's long-term value for our shareholders," said Chip McClure, chairman, CEO and president. "We are confident that this transaction will not only unlock shareholder value, but will also significantly strengthen the competitive positions of both companies and better align them with their respective customer bases.
"Each company will benefit from a greater strategic focus on its core business and growth opportunities as well as from increased recognition in each of its global market segments. In addition, the separate companies will offer more attractive and targeted investment opportunities, with incentives for management and employees that are more closely aligned with company performance and shareholder interests."
The planned spinoff of the LVS business -- to be named Arvin Innovation, Inc. -- would be implemented through a pro rata tax-free dividend to ArvinMeritor shareholders. Upon completion of the spinoff, ArvinMeritor shareholders will own 100 percent of the common stock of Arvin Innovation. Approval of the spinoff by ArvinMeritor shareholders is not required, and the company expects to complete the spinoff within the next 12 months, contingent upon satisfactory financial and automotive market conditions as well as other customary approvals.
"Our decision to spin off the LVS business is part of the company's ongoing corporate transformation -- our 3R strategy to rationalize, refocus and regenerate -- that has been underway for the last three years," McClure said. "Separating these two businesses and successfully implementing our Performance Plus initiatives are major steps in the transformation to build two stronger, more competitive companies for the future.”
McClure will remain as ArvinMeritor's chairman, CEO and president. James Marley, currently a board member of ArvinMeritor, will lead Arvin Innovation's board of directors as non-executive chairman. Until the spin is completed, Marley, a retired chairman of the board of AMP Inc., will remain on the ArvinMeritor board. Phil Martens, currently ArvinMeritor's senior vice president and president, Light Vehicle Systems, will become the president and CEO of Arvin Innovation.
"As a separate independent unit, Arvin Innovation will be better positioned to drive specific growth initiatives, including improving our customer focus and expanding our global presence," said Martens. "With increased flexibility as a stand-alone business, Arvin Innovation will have an excellent opportunity to create next-generation systems technology solutions for our customers around the world. In addition, we look forward to the many new and enhanced opportunities the new organization will provide for our worldwide employees."
Jim Donlon, executive vice president and CFO of ArvinMeritor will immediately begin supporting ArvinMeritor's LVS business group in the capacity of chief financial officer as it prepares to become an independent company. Upon completion of the spin, he will become executive vice president and CFO of Arvin Innovation.
Jay Craig, senior vice president and controller, will replace Donlon as ArvinMeritor's senior vice president and CFO, effective immediately.
Rakesh Sachdev, senior vice president of ArvinMeritor and president of Asia Pacific, will become executive vice president, chief administrative officer and managing director of Emerging Markets of the new company, upon the completion of the spin. However, until a successor is named, he will continue to be responsible for ArvinMeritor's Asia Pacific region.
When the spinoff is completed, Carsten Reinhardt, senior vice president of ArvinMeritor and president of the company's Commercial Vehicle Systems business, will be named COO for ArvinMeritor.
ArvinMeritor will remain headquartered in Troy, Mich. Arvin Innovation will be headquartered in Detroit, Mich., at the current location of the LVS Detroit Technology Center, with other corporate offices located in Europe, Asia Pacific and South America.