Delphi sells battery business

Delphi Corp has sold its battery product line, with the exception of two US operations, to Milwaukee-based Johnson Controls, for $202.5 million.

The business sold includes Delphi‘s global starting, lighting and ignition lead-acid battery operations, including joint venture interests. The transaction also includes tools, inventory, equipment, intellectual property and brand names associated with the battery product line. In addition, approximately 2,700 employees will transfer to JCI. The business generates approximately $600 million annually in global consolidated revenues.

Prior to the sale, Delphi‘s global battery product line manufactured lead-acid batteries for original equipment (OE) manufacturers and sold original equipment for aftermarket distribution. Delphi manufactures batteries in two US plants in Fitzgerald, Georgia, and New Brunswick, New Jersey; and internationally in Sarreguemines, France; Piracicaba, Brazil; Tlaxcala, Mexico; and joint ventures in Shanghai, China; Kumi, Korea; and Dammam, Saudi Arabia.

The transaction is anticipated to be a two-step sale of Delphi‘s global battery business. In the first step, JCI assumed global supply contracts and shareholdings of Delphi’s battery manufacturing operations in France, Brazil, Mexico and in Delphi’s joint ventures in Korea, China and Saudi Arabia. Further, JCI assumed responsibility as a tier 1 supplier for OE customers of Delphi’s US operations. Delphi entered into a contract manufacturing supply arrangement, becoming a tier 2 supplier to JCI, and began supplying batteries from its two US plants to JCI for a transition period.

In the second step, subject to agreement between Delphi and its unions, it is anticipated that JCI would purchase Delphi’s New Brunswick operation. Pending a commercial agreement between Delphi and a customer, the Fitzgerald operation will remain with Delphi and change to a new product line at the conclusion of this transition period.

Approximately 3,470 employees, hourly and salaried, work in Delphi‘s worldwide and joint venture battery manufacturing business.