Aptiv announces plan to spin off Electrical Distribution Systems business

Aptiv PLC has announced its intention to separate its Electrical Distribution Systems (EDS) business through a spin-off, creating two independent companies. This decision was approved by the company’s Board of Directors and is expected to be completed by March 31, 2026, pending regulatory approvals and other customary conditions.

Following the spin-off, Aptiv will focus on advanced software and hardware technologies, including products for automotive, aerospace, defense, telecommunications, and industrial sectors. The company’s portfolio will consist of software platforms for advanced driver-assistance systems (ADAS), in-cabin user experience, and interconnects and components. The separation will allow Aptiv to concentrate on long-term trends such as electrification, automation, and artificial intelligence, aiming for mid-to-high single-digit revenue growth and strong cash flow.

EDS, on the other hand, will become a standalone entity specializing in electrical architectures for automotive and commercial vehicle markets. The company provides low voltage and high voltage solutions, which are crucial as electric vehicle (EV) production grows. EDS is positioned to benefit from demand for optimized vehicle architectures that support the increasing content and complexity of modern vehicles. The business is expected to achieve mid-single-digit revenue growth and solid free cash flow.

The separation will be executed through a tax-free spin-off, with Aptiv shareholders receiving a pro-rata dividend of shares in the new EDS company. The move is expected to enhance the strategic focus of both companies and allow for more tailored investment and growth opportunities.

Aptiv’s revenue for 2024 is expected to reach $12.1 billion, with $1.4 billion in operating income and $2.3 billion in Adjusted EBITDA. For EDS, the anticipated revenue for the same period is $8.3 billion, with $0.4 billion in operating income and $0.8 billion in Adjusted EBITDA.

Aptiv’s CEO, Kevin Clark, emphasized that the spin-off represents the next step in the company’s transformation and will position both Aptiv and EDS for greater success in their respective markets.