Delphi said Thursday it plans to sell its thermal business to Mahle GmbH for $727 million as part of the company’s plan to focus on core products and technology.
The thermal division generated sales of about $1.6 billion in 2014 from 13 plants globally. It employs about 6,700 workers worldwide.
The division’s products include HVAC modules, air-conditioning compressors and cooling components.
The sale of the division is part of Delphi’s plan to reshape itself into a global company with a more diversified customer base in three core product areas.
Delphi said it will use the money to fund growth initiatives, including acquisitions and share repurchases.
“The transaction positions Delphi with a more focused high-growth product portfolio that addresses the trends of safe, green and connected,” Delphi CEO Rodney O’Neal said in a statement. “The acquisition of the business by Mahle, a leading global supplier of thermal systems, ensures continued industry-leading service to our customers and stability for our employees.”
The transaction is expected to close by the end of the third quarter of this year.
Mahle employs about 66,000 worldwide and about $11.4 billion in annual sales. The German auto supplier specializes in engine systems, filtration, electrics/mechatronics and thermal management.
“Mahle will greatly strengthen its competitive position in the area of thermal management as a result of this acquisition,” Heinz Junker, Mahle’s chairman and CEO, said in a statement.
Delphi and Mahle also signed a separate letter of intent to sell Delphi’s stake in Shanghai Delphi Automotive Air-Conditioning System.
On Thursday, Delphi shares rose 97 cents, or 1.2 percent, to $79.41. The company’s stock has risen more than 270 percent since 2011, when it went public at $21.37 per share.