Aptiv to separate electrical distribution systems business

(Reuters) - Aptiv said on Wednesday it would separate its electrical distribution systems (EDS) business into a new company, sending the shares of the auto parts supplier up more than 5% in premarket trading.

The business manufactures a range of power and signal distribution systems, including high-speed data and electrical components, needed to build modern, feature-packed electric vehicles.

The company said the separation, likely to be completed by March 31, 2026, was expected to be effected through a spin-off of EDS.

Aptiv shareholders will retain their current shares and receive a pro-rata dividend of shares of the new EDS company stock.

Following the separation, Aptiv will offer a full sensor-to-cloud technology stack, including advanced driver aid systems and in-cabin software platforms.

The Dublin-based company, which counts the Detroit Three automakers as well as Volkswagen AG and BMW as its key customers, supplies key electrical components and safety software for vehicles.

During the third quarter, Aptiv had said it would take extra steps to boost profitability, after cutting its annual sales forecast, as large automakers realigned their electrified ambitions to adjust with a bumpy market environment.

The auto industry had faced a challenging second half in 2024 over competition from Chinese companies and a decline in consumer demand due to inflation and economic concerns, leading many manufacturers to prioritize higher-margin SUVs and hybrids.

U.S. President Donald Trump has also revoked the previous administration's executive order on EVs that sought to ensure half of all new vehicles sold in the country by 2030 were electric.

(Reporting by Nathan Gomes in Bengaluru; Editing by Shilpi Majumdar)