Germany’s Leoni announced that it is considering plans to either sell or float a stock market listing for its Wire and Cables Solutions (WCS) business, based on a broad review of the company’s group structure, and a decision to focus on its Wiring Systems Division (WSD).
A press release said that the company had considered the optimal future ownership structure of both the WCS and its Wiring Systems Division (WSD) to determine how both divisions could achieve their full potential.
The WCS serves a wide range of growing end markets, such as healthcare, factory automation, transportation and automotive. The release noted that with its LEONiQ technology, "WCS is well positioned to become the front runner for intelligent cable solutions."
The WSD, which supplies engineered cables and interconnect solutions, and is anchored by the automotive field, "is on the way to sell not only products, but increasingly provide services in engineering, architectural design and simulation," the release said.
Leoni’s Board of Directors found very limited synergies between both divisions, and intends to increase their operational independence, the release said. In this context, corporate support functions will transfer from the holding company to the divisions.
"We believe that both divisions will benefit from a separation," said Leoni Chief Executive Aldo Kamper. "This creates two clearly focused businesses, whose individual market and technological developments as well as investments can be better and more quickly implemented."
The decision to separate WCS from the group and focus resources on WSD will strengthen our ability to further strategically develop this business, Kamper said. "This would create two clearly focused businesses, whose individual market and technological developments as well as investments can be better and more quickly
With its focus on WSD, Leoni expects to be in a better position to focus on operational improvements and continue to build on its leading position in automotive wiring systems. It could concentrate its resources on being a global solutions provider for the automotive sector while seeking emerging opportunities on the energy and data side. With its WSD becoming a systems supplier and development partner to its customers, Leoni is on the way to sell not only products, but increasingly provide services in engineering, architectural design and simulation.
Bruno Fankhauser, a member of the Board of Directors of Leoni with responsibility for the WCS division, agreed that the split made sense. "We have shown strong growth in recent years and have maintained a leading position as a provider of intelligent cable solutions and services. With today’s decision, we want to put the WCS division in a position to realize its full potential more quickly with a different ownership structure."
While either a sale or stock market exit is envisioned, a partial sale is also possible, the release said. "To date, no final decision has been taken in this regard. However, following a potential separation, Leoni’s primary focus would be on the development of its WSD division. To this end, Leoni has begun to mandate respective advisors."
The company notes that implementation of its VALUE 21 program is on track to achieve sustainable gross cost savings targets of €500 million per year by 2022, with 75% of the savings expected to be realized in WSD.