Source: Veoneer announcement
Stockholm – The automotive technology company, Veoneer, Inc. (NYSE: VNE and SSE: VNE SDB), has, following a strategic review, decided to exit the brake control business and has signed a non-binding agreement with a well-established automotive supplier to divest Veoneer’s yet to be launched U.S. brake control programs.
Following the strategic review initially launched in April 2019, Veoneer has decided to focus on its core electronics business and exit the brake control business. Veoneer is a leading autotech company focused on hardware and software in the safety domain. Following this divestiture Veoneer intends to further strengthen this core product offering and continue to build on this leading position.
Through this divestiture, the company expects to achieve total reductions of negative cash flow of more than $80 million for 2020 and 2021 as these programs are in an investment and ramp-up phase ahead of major launches.
The divestiture to a well-established automotive supplier follows the completion of the sale of the Asian portion of Veoneer’s brake control business (VNBS) on February 3, 2020. The new company will take over the entire team which will be able to continue to work on these important programs. The agreed purchase price is $1.
In conjunction with the transfer, the company will incur a non-cash write-down of net assets related to VBS, with a negative net income effect to Veoneer of approximately $144 million in the first quarter of 2020. The write-down is a non-cash item, which will not affect cash flow, financial targets or the business plan of the Electronics business.
The total net income effect from the divestiture of our brake control segment, including both VNBS Asia and the US operations, is expected to be negative by approximately $65 million as the VNBS Asia transaction resulted in a gain of $77 million.
Veoneer will retain a minor legacy brake control business in the U.S. with total expected lifetime sales of around $70 million.
The final agreement is expected to close during the second quarter of 2020.