Investing.com adds to Aptiv’s stock decline plan

Investing.com — Shares of Active (NYSE: ) rose 5% in premarket trading. The strategic move is expected to increase the focus and efficiency of both Aptive and the new standalone EDS business.

Aptiv Chairman and CEO Kevin Clarke said this decision marks the next phase of the company’s transformation journey. The separation is designed to enable both entities to more effectively meet customer needs and take advantage of market opportunities, creating greater success and shareholder value. Aptiv aims to focus on advanced software and hardware technologies in line with global trends such as security, electrification and connectivity. Post-separation, Aptiv expects strong financial performance, generating mid-to-high single-digit revenue growth and strong cash flow.

The new EDS company is expected to build on a century-old legacy of focusing on providing next-generation electrical architecture solutions for the automotive and commercial vehicle markets. With targeted mid-single digit revenue growth and strong free cash flow, EDS plans to enhance its competitiveness through strategic investments and return of capital to shareholders.

In the year It is scheduled to expire on March 31, 2026 and is intended to be tax-free for both Aptiv and its shareholders. The transaction is subject to customary conditions, including the approval of Aptiv’s board of directors and the effectiveness of a Form 10 registration statement with the US Securities and Exchange Commission.

In conjunction with the announcement, Aptiv confirmed its full-year 2024 outlook, which was originally presented at October 31, 2024. An investor call is scheduled for the same day.

The strategic separation is seen as a positive move to improve the companies’ respective market positions and financial prospects, which could increase investor interest in the differentiated value propositions offered by Aptiv and the new EDS entity post-separation.

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