ArvinMeritor to Spin Off Light Vehicle Systems

Three-year transformation still ongoing

Auto parts manufacturer ArvinMeritor Inc. plans to spin off its Light Vehicle Systems business to shareholders, a decision that follows a “comprehensive strategic review to enhance the company's long-term value," according to chairman, CEO, and president Chip McClure. He called the spin-off a part of the company’s transformation effort — “our 3R strategy to rationalize, refocus and regenerate -- that has been underway for the last three years."

The current organization was launched as a spin-off of Rockwell International’s automotive businesses in 1997. That new company Meritor Automotive, merged with Arvin Industries in 2000. Last year, the company acquired Mascot Truck Parts Ltd., a remanufacturer of transmissions, drive axle carriers, steering gears and drivelines. It also sold its Light Vehicle Aftermarket European exhaust operations and Emissions Technologies businesses.

Arvin Innovation Inc. will be established through a pro-rated, tax-free dividend to ArvinMeritor shareholders, who will own 100% of the common stock. Their approval is not required; ArvinMeritor‘s directors already approved the spin-off, which will be complete within 12 months, assuming the necessary regulatory approvals are gained and that financial and automotive market conditions are favorable.

Without putting a value to the prospective company, ArvinMeritor reported the business unit had sales of $2.2 billion in 2007 -- $2.0 billion of value-added sales, 60% of which is outside North America, and $200 million of pass-through sales.

The LVS group produces components, systems, modules to passenger car and light truck OEMs. Among its products are roof, and door modules and systems, motors, latches, and chassis and suspension modules.

ArvinMeritor’s Commercial Vehicle Systems business (which manufactures axles and drivelines, braking systems, suspension systems, and ride control products for heavy- and medium-duty trucks, buses, off-highway and military vehicles) will remain part of the original organization.

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