Aptiv PLC to Separate Electrical Distribution Systems Business

By Bobby Samwell • Wednesday, January 22 10:24 • Permanent Link

Aptiv PLC (NYSE: APTV) recently announced its intention to separate its electrical distribution systems business (EDS) from the company. This will create two independent companies, each optimally positioned to serve their customers and create value for their shareholders.

Following the separation, Aptiv will offer a full sensor-to-cloud technology stack, including industry-leading open-architected ADAS and in-cabin user experience software platforms, and a broad range of interconnects and components. The company estimates that Aptiv had $12.1 billion in revenues, $1.4 billion in U.S. GAAP operating income, and $2.3 billion in adjusted EBITDA for 2024, excluding the EDS business to be separated.

The new EDS will be a leading global provider of low voltage and high voltage electrical architectures for automotive and commercial vehicle markets. The company estimates that EDS had $8.3 billion in revenues, $0.4 billion in U.S. GAAP operating income, and $0.8 billion in adjusted EBITDA for 2024, excluding the Aptiv business from which it will be separated.

The separation transaction is expected to be effected through a tax-free spin-off of EDS to Aptiv shareholders. Aptiv is targeting completion of the separation by March 31, 2026, subject to final approval by Aptiv’s board of directors and other customary conditions.

In connection with the announcement, Aptiv affirmed its full-year 2024 outlook, as previously provided on October 31, 2024. The company will release its fourth-quarter 2024 financial results on February 6, 2025.

Goldman Sachs & Co. LLC and Centerview Partners LLC are serving as financial advisors to Aptiv, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel.

Aptiv believes that the separation will deliver benefits for its customers, provide opportunities for its employees, and create significant value for its shareholders.

As a result of these changes, investors and analysts will be closely monitoring the separate financial performance of Aptiv and EDS moving forward. Following these announcements, the company's shares moved 3.9%, and are now trading at a price of $64.22. For the full picture, make sure to review Aptiv PLC's 8-K report.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.