ArvinMeritor to Spin Off Auto Unit, Focus on Trucks

Auto and truck component maker ArvinMeritor Inc. said Tuesday it will spin off its automobile business unit to its shareholders and focus on supplying parts for commercial trucks.

The $2.2 billion passenger car operation will be turned into a new company called Arvin Innovation Inc., the company said. ArvinMeritor makes brakes, shock absorbers and other parts for heavy-duty truck applications.

“The plan to separate our two businesses is the result of a comprehensive strategic review to enhance the company's long-term value for our shareholders,” said Chip McClure, ArvinMeritor’s chairman and chief executive officer.

McClure will retain his role as CEO, while Phil Martens, ArvinMeritor’s senior vice president and president of its Light Vehicle Systems unit, will become CEO of Arvin Innovation.

The company’s directors have given gave preliminary approval to the move, McClure said, and the spinoff could take as long as 12 months and is subject to other conditions, including a final board vote, Bloomberg reported.

ArvinMeritor will retain an expanding truck business that accounts for about two-thirds of its $6.45 billion in annual revenue. The light-vehicle division has shrunk as it has cut jobs, shut plants and sold its emissions unit and other operations, Bloomberg said.

ArvinMeritor posted a fiscal second-quarter profit for the period ending March 31, its first in five quarters. The light-vehicle unit’s earnings before interest, taxes, and other charges more than doubled to $19 million, while the commercial truck division rose 40% to $84 million by the same measure, Bloomberg reported.

ArvinMeritor’s common stock will continue to trade on the New York Stock Exchange under the symbol ARM, and the company said it has applied for Arvin Innovation to be listed on the Nasdaq Stock Market under the symbol ARVI.