After a day of swirling rumors that drove a nice gain in its stock price, Johnson Controls, Inc. (NYSE:JCI) set the record straight late on Wednesday with a terse press release: The company is not putting its sizable automotive interiors business up for sale.
Instead, it’s putting its automotive electronics business up for sale. And it could get a billion dollars or more for the unit.
What is Johnson Controls selling?
Let’s start with a bit of background. Among its other businesses, Johnson Controls, or JCI, is a big-time automotive supplier, a maker of parts and sub-assemblies for major automakers around the world. The clients of Johnson Controls, Inc. (NYSE:JCI)’s “Automotive Experience” division include Ford Motor Company (NYSE:F), Toyota Motor Corporation (ADR) (NYSE:TM), Volkswagen (NASDAQOTH:VLKAY), General Motors Company (NYSE:GM), and nearly every other automaker you’ve ever heard of (and maybe a few that you haven’t).
The company says that it supplied parts for more than 50 million cars last year, or about five out of every six cars built in the whole world. By itself or via joint ventures, it operates about 240 different factories in 33 different countries, including a big and growing presence in China.
This is a big operation, in other words. It accounted for 51 percent of Johnson Controls, Inc. (NYSE:JCI)’s $42 billion in revenue in fiscal 2012. (JCI’s other two divisions are Power Solutions, which makes car batteries, and Building Efficiency, which makes systems for managing big buildings’ climate and security.)
Johnson Controls, Inc. (NYSE:JCI)’s Automotive Experience division is broken into three separate units: Seating, Interiors, and Electronics. Seating makes … well, it makes car seats, a business Johnson Controls, Inc. (NYSE:JCI) has been in for more than 80 years. The Interiors unit makes things like dashboard parts, the trim panels that go on the inside of car doors, headliners (the soft cloth panel on the “ceiling” of your car’s interior), and so forth.
And then there’s the Electronics unit, which is the one that is now up for sale.
A closer look at the Electronics unit
Following the theme of JCI’s other units, Electronics makes several different kinds of electronic systems that might be found in a car’s interior, everything from instrument panels, to “infotainment” systems, to parts for automatic door locks and tire pressure sensors.