Auto Service World
News   February 3, 2006   by Auto Service World

Update: ArvinMeritor Aftermarket Business to be Sold Off in Pieces


ArvinMeritor has reported that its Light Vehicle Aftermarket business would be sold off piecemeal.
The divestiture had been previously announced and the operations have been classified as “discontinued” for accounting purposes, but the company had maintained the position that it preferred to sell the business, which includes ride control, exhaust, and filter businesses, as a single unit. That prospect has faded since the decision to divest the business and in the fourth quarter of the company’s fiscal 2005 the management concluded that another option would be pursued.
In the fine print of an SEC filing late last November, the company stated its change in intentions.
“Management concluded that it is more likely that LVA’s North American businesses will be sold individually rather than as a whole. Although we do not believe this change in strategy materially impacts the aggregate expected value to be realized on the sale of the entire LVA business, it did require us, for accounting purposes, to evaluate fair value on an individual business basis rather it did require us, for accounting purposes, to evaluate fair value on an individual business basis rather than LVA North America as a whole. This resulted in a non-cash impairment charge of $43 million ($28 million after-tax, or $0.40 per diluted share) to record certain LVA businesses at fair value. Our previous strategy was to sell the LVA North American business as a whole. Accordingly, the company’s previous analysis of impairment was on the total North American business. This analysis indicated that the aggregate fair value of the North American LVA business, when taken as a whole, exceeded its carrying value.”
The company has accordingly extended the deadline for divestiture until the end of fiscal 2006.


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