TROY, Mich. — ArvinMeritor has announced a plan to spin off its Light Vehicle Systems (LVS) business to its shareholders, with the Commercial Vehicle Systems (CVS) business remaining with ArvinMeritor. It will result in two independent companies with little overlap, if any.

The commercial enterprise will continue to focus on medium, heavy, and extra-heavy truck products as before. When the spinoff is done, Carsten Reinhardt, presently senior vice president of ArvinMeritor and president of the company’s CVS unit, will be named COO for ArvinMeritor. There will be no other changes of significance.

“The plan to separate our two businesses is the result of a comprehensive strategic review to enhance the company’s long-term value for our shareholders,” said Chip McClure, chairman, CEO and president. “We are confident that this transaction will not only unlock shareholder value, but will also significantly strengthen the competitive positions of both companies and better align them with their respective customer bases.

“Each company will benefit from a greater strategic focus on its core business and growth opportunities as well as from increased recognition in each of its global market segments. In addition, the separate companies will offer more attractive and targeted investment opportunities, with incentives for management and employees that are more closely aligned with company performance and shareholder interests,” continued McClure. He will remain as ArvinMeritor’s chairman, CEO and president.

The spinoff of the LVS business — to be named Arvin Innovation, Inc. — would be implemented through a pro-rata tax-free dividend to ArvinMeritor shareholders. Upon completion of the spinoff, those shareholders will own 100 percent of the common stock of Arvin Innovation. The spinoff should be completed within the next 12 months, assuming “satisfactory financial and automotive market conditions.”

ArvinMeritor CVS president Carsten Reinhardt (left)
and CEO Chip McClure

In an early-morning conference call today, McClure was asked why the separation of the company’s light-duty and commercial businesses should occur now, less than 10 years after the original merger of Arvin and Meritor. Back then, he answered, the companies were joined to fend off the challenges of cyclicality in North America, especially in the commercial vehicles market.

It made sense at the time, he went on, but in the intervening decade both business units have become global players, and that cyclical factor has dissipated. More than 60 percent of the LVS business is now outside North America, while nearly 50 percent of the company’s CVS activity is global, and both are growing in South America, eastern Europe, India, and China.

ArvinMeritor will remain headquartered in Troy, Mich., while Arvin Innovation will be based in Detroit.

The company’s LVS business had sales of $2.2 billion in 2007. In its new incarnation it will have some 9,000 employees with 42 facilities in 16 countries. ArvinMeritor’s commercial vehicle business will have 62 global locations along with 10,000 employees in 15 countries. In 2007, CVS sales were more than $4.2 billion.