Automotive electronics spin off

03 August 2009

Omron Corporation has announced its intention to spin off its automotive electronic components business into a new company
Omron Corporation has announced its intention to spin off its automotive electronic components business into a new company

Following a resolution at a recent board of directors meeting, Omron Corporation has announced its intention to spin off its automotive electronic components business into a new company, to be established in April 2010, through a corporate split.

Details will be announced following approval at the board of directors meeting scheduled for the second half of January 2010.

Omron has designated the period from February 2009 through to March 2011 as a ‘revival stage’ in which sweeping profit structure reform will be implemented throughout the entire Group. As part of this profit structure reform, Omron will reorganise its business domains over the medium-term, focusing on its three control-based businesses (industrial automation, electronic components and automotive electronic components). The spin off, which deals with the automotive electronic components business, is intended to improve profitability by allowing independent management of this business.

The company entered the automotive electronic components business in 1983. In 2003, after Omron instituted an internal company system, this division was reorganised as the Automotive Electronic Components (AEC) Company. Omron worked to strengthen the burgeoning business, and sales increased rapidly on a global basis alongside the expansion of the automobile market.

The automobile industry is now feeling the effects of the global recession that began in the United States last year. With little hope of recovery in the short term and the future remaining unclear, alliances between automotive manufacturers have accelerated, creating a spill-over effect on suppliers of automotive systems and components. AEC sees the changes currently taking place within the global automobile industry as an opportunity to transform itself into a company that can respond quickly and boldly to change.

In recent years, there has been a shift in what consumers require from their vehicles, resulting in the increasing adoption of automotive electronics. As an independent company, AEC will build on Omron’s sensing and control technology and strengthen the electronics technology and auto know-how of technology that it has cultivated to date. AEC will focus these strengths on electronic control systems used in automotive bodies and work to respond to changing customer needs. At the same time, it will take a proactive and agile approach in considering partnerships and collaboration with other companies in order to respond to customer needs as quickly as possible.

In consideration of these points, Omron has determined that independent management capable of understanding and responding to movements in the automobile industry was needed to further strengthen AEC.

According to the company, this is a simple corporate split in which Omron is the transferring company and the new company is the assuming company. Upon the split, the new company will issue shares of common stock and allocate all of those shares to Omron, making it a wholly owned subsidiary of Omron. It has been stated that there will be no changes to Omron’s name, business, head office location, representative, capital or reporting period (fiscal year end) as a result of the spin off.


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