Adient has closed transactions, ending a joint venture with partner Yanfeng Automotive Trim Systems (YF), according to a Sept. 30 press release.
The global automotive seating industry leader announced Thursday the completed transactions would enable Adient to drive its strategy independently in China with net proceeds from the transactions totaling around $1.4 billion and net proceeds collected at closing totaling $695 million.
"We are pleased to have successfully closed these transactions, which offer Adient the opportunity to drive our China strategy independently and position the company for future growth in the world's largest automotive market," Adient President and CEO Doug Del Grosso said in a release from the company.
Under the agreement, Adient sold its 49.99% interest in the joint venture, known as the Yanfeng Adient Seating Co. (YFAS) for $1.4 billion, the release states.
According to the release, Adient's strategy in China is "expected to result in a variety of benefits, including capturing growth in profitable and expanding segments; improving the integration of the company's China operations; and allowing for more certain value realization relative to status quo, where cash and value are generated from dividends at entities not in Adient's control."
The company will acquire YFAS's 50% equity interest in Chongqing Yanfeng Adient Automotive Components Co., Ltd. (CQYFAS) and 100% equity interest in Yanfeng Adient (Langfang) Seating Co. (YFASLF) from YFAS, the release states.
"Following the acquisition of YFAS's interests in CQYFAS and YFASLF, Adient will consolidate those businesses. YF will operate the remainder of YFAS as a wholly owned enterprise," Adient said in the release.
Moving forward, Adient China business dealings are still projected to earn around $4.5 billion annually.
In an agreement signed with Chongqing Boxun Industrial in conjunctions with these transactions, the release states Boxum has a put right priced at $125 million to sell and may require Adient to buy Boxun's 25% interest in CQYFAS. If Adient buys Boxun's 25% interest, Adient would own 100% of CQYFAS, according to the release.
Adient's proceeds from the transactions are expected to be used to pre-pay a portion of the company's debt and to fund Boxun's put right, if exercised, the release states. They may also be used for general corporate purposes.