Aptiv to Spin Off Electrical Distribution Systems Auto-Parts Unit

Aptiv PLC, a global technology company enabling a more safe, green, and connected future, has announced that its Board of Directors has unanimously approved a plan to separate its Electrical Distribution Systems (EDS) business from Aptiv, creating two independent companies. The separation is expected to be effected through a tax-free spin-off of EDS to Aptiv shareholders, with the transaction expected to close by March 2026.

The separation will allow Aptiv to focus on its core growth areas, including Advanced Driver Assistance Systems (ADAS), vehicle software, and advanced connectivity solutions. By eliminating the drag of the lower-growth EDS business, Aptiv can allocate more resources to its high-growth sectors, where margins are typically higher and technological barriers to entry provide competitive advantages. The separation will also allow Aptiv to pursue targeted M&A opportunities in these markets more effectively.

EDS, as a separate company, will be well-positioned to capitalize on its global scale, localized regional capabilities, and broad portfolio of low voltage and high voltage vehicle architecture. With its industry-leading cost structure, global footprint, and disciplined capital allocation, standalone EDS will be poised to further strengthen its competitive position, while continuing to deliver strong earnings and cash flow growth that enable investment in bolt-on acquisitions and further manufacturing process automation, as well as the return of capital to shareholders.

The separation is expected to enhance strategic and employee focus, provide other efficiencies, and create significant value for both Aptiv and EDS shareholders. Aptiv will maintain a corporate presence in Switzerland, and the separation is expected to be tax-free for both Aptiv and its shareholders for both Swiss and U.S. federal income tax purposes.

Aptiv reiterated its October projection for 2024 adjusted earnings in a range between $6 and $6.30 a share. For 2024, Aptiv expects to report $1.4 billion in operating income, $12.1 billion in revenue, and $2.3 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding the EDS business.

The spin-off of EDS is a strategic move by Aptiv to focus on its core growth areas and create two independent companies, each optimally positioned to serve their customers and create value for their shareholders. The separation is expected to enhance strategic and employee focus, provide other efficiencies, and create significant value for both Aptiv and EDS shareholders. Aptiv will maintain a corporate presence in Switzerland, and the separation is expected to be tax-free for both Aptiv and its shareholders for both Swiss and U.S. federal income tax purposes.