Huayu Automotive Systems Co., Ltd. (Huayu Automotive), a Chinese auto part and component manufacturer, has signed a confidentiality and non-disclosure agreement with the US Johnson Controls to acquire the latter's auto electronics business.
Sources close to the deal revealed that the Chinese publicly listed company entered into the agreement with Johnson Controls to commit to a non-bidding quotation period involving a bid over US$ 1bn.
Also, people privy to this development disclosed that the primary reason Huayu Automotive, China's largest independent auto part and component maker, made the move to possibly acquire Johnson Controls centered on its intent to shore up its weak auto electronics business. If successful, the acquisition will complement the company’s already matured and successful automotive interior and exterior decorations and functional integrated parts divisions.
The purchase would allow Huayu Automotive to strengthen its overall profit outlook and create a new revenue growth point for the next 5 years. This may be an opportune moment to make such an investment given that the global auto electronics control market has surpassed Euro$ 190 bn in 2012, of which less than 2% came from the Chinese market.