Automotive safety equipment supplier Autoliv (ALV 127.26 +14.01 +12.4%) trades decidedly higher today in reaction to news the company’s Board of Directors has authorized management to conduct a strategic review of its operating structure with the intent to create separate companies of its current business segments, Passive Safety and Electronics.
Per this morning’s release, the intent is to create two publicly traded companies capable of addressing two distinct, growing markets with leading product offerings and thereby create additional value for shareholders, customers and other stakeholders as compared to the current, combined structure of Autoliv. The strategic review process will evaluate this and other options.
The Electronics business consists of Active Safety Products (automotive radars, cameras with driver assist systems, night vision systems and positioning systems), Restraint Control and Sensing and Brake Systems. It is estimated that the total available market for Safety Electronics will grow from around $20 billion in 2017 to more than $40 billion in 2025.
ALV’s Passive Safety business consists of airbag systems, steering wheels and seatbelts. It is estimated that the total available market for Passive Safety will grow from around $20 billion in 2017 to around $25 billion in 2025. During the same period Passive Safety is expected to outgrow the market and light vehicle production, which is expected to grow by close to two percent annually.
If the separation takes place, ALV expects the process to take around one year under most separation scenarios.