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Visteon Corp (VC) Worth Less than the Sum of its Parts: Cramer

Visteon Corp (NYSE:VC) is considering splitting itself into two companies it was revealed last week, a revelation that caused Visteon Corp (NYSE:VC)’s stock to spike more than 5% in a matter of moments last Wednesday. The proposed move could be extremely valuable to shareholders according to CNBC’s Jim Cramer, who discussed Visteon Corp (NYSE:VC) at length during an episode of Mad Money on CNBC on Friday.

Visteon Corp

“Right now Visteon’s one of those stocks that’s actually worth less than the sum of its parts in its current extent. Don’t panic, it’s ok; no, it’s better than ok. The reason? Because Visteon’s electronics division is a fast growing powerhouse that deserves to trade at a higher price to earnings multiple than what it’s currently getting. At the moment, this really fantastic business is buried within a larger company, no one’s focused on it. But if the electronics segment were to become a standalone company? I think it would be coveted by most growth money managers; it would trade much higher,” Cramer said.

According to Bloomberg, Gabelli and Co. estimated that the company could be worth 25% more than their current market cap of just over $4.5 billion should the company be split up. Gabelli further estimated that a sale of the electronics division would be worth $2.6 billion alone. Visteon Corp (NYSE:VC) is reportedly considering such a sale, and it’s still unclear whether they’ll spin-off the electronics division or sell the division off entirely.

As Cramer said, Visteon Corp (NYSE:VC)’s board has said that all options are on the table, and has previously shown a willingness to do whatever it takes to boost shareholder value, which has included shedding off other aspects of their operations that didn’t fit cohesively within their two units.

After boosting the electronics unit earlier this year with a takeover of Johnson Controls Inc., it appears setting that now-soaring business (which had sales in its most recent quarter up 25% over the past two years and is expected to reach $3 billion in revenue annually by 2015) free is the next way to achieve that.

Visteon Corp (NYSE:VC) enters today at $106.38, and has gained 2.25% over the last week and 8.81% for the past month. It has been on a steady rise since August 2012, gaining more than 300% in that time.

Disclosure: none

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