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Published on : Jun 11, 2015

Johnson Controls is planning to sell off its automotive-seating line business which generates around two-fifths of its annual revenue. The move is considered as the manufacturing firm’s effort to move away from low-margin automotive parts businesses. Johnson Controls is the largest auto seating manufacturer across the globe and according to the estimates by industry analysts, selling its automotive-seating business will fetch around US$9 billion. Last year, out of the annual revenue of US$42.8 billion, seating business generated a revenue worth US$17.5 billion for the company.

According to Alex Molinaroli, the chief executive, Johnson Controls is focussing more to become a diversified conglomerate with businesses across various industries. The company’s decision to cut down its automotive interiors business will lead it to focus more on industries recommended by its investors. Apart from the automotive-seating line business, the company has power storage business and building systems business. Molinaroli has hinted that Johnson Controls might look at acquisitions to expand into other industries. 

After taking the charge of the company in 2013, Molinaroli has tried to move Johnsons Controls into more profitable and high-margin businesses. He has revealed that talks are on about the best way to separate the automotive-seating line business. Centerview Partners LLC and Goldman Sachs Group Inc. have been hired as the legal advisors to help in the process. Johnson Controls has dominated nearly one third of the global seating market. Its competitors in this business are Toyota Boshoku Corp., Lear Corp., and Faurecia SA. Industry analysts are predicting that the company’s seating business would find buyers among the other car parts companies such as Magna International Inc.