DETROIT (AP) — Automotive parts and electronics maker Delphi Corp. plans to spin off its vehicle powertrain operations into a separate publicly traded company.
The British company with U.S. operations in suburban Detroit says Delphi shareholders will get stock in both companies in the tax-free deal.
Shares of the company surged more than 10 percent to $86.49 Wednesday.
Delphi, the former parts arm of General Motors, has been shedding conventional automotive businesses ever since it was spun off as a separate company by GM in 1999.
On a conference call with reporters Wednesday, CEO Kevin Clark denied that the powertrain unit was being jettisoned to make the rest of the company more attractive to investors who are attracted to its work on computing platforms and advanced safety and autonomous driving systems.
Clark said the powertrain unit's work on gasoline direct injection and variable valve timing technologies that make internal combustion engines more efficient will be good business for a long time, citing projections that combustion engines will power 95 percent of the world's cars in 2025.
"We believe there's all sorts of opportunity within the powertrain segment to develop advanced technologies that enhance the efficiency of the internal combustion engine," he said. Powertrain also will be involved in electric propulsion, making inverters and other components for electric and hybrid cars, he said.
The powertrain unit has about 20,000 employees worldwide with 5,000 engineers. It had revenue of $4.5 billion last year, according to Delphi, which expects the spinoff to be completed by March of 2018.
Liam Butterworth, who is now president of Powertrain Systems, will be the new company's chief executive.
Clark said one of the companies likely will keep the Delphi name and the other will get a new name, but that decision hasn't been made yet.
Also Wednesday, Delphi Automotive PLC (DLPH) reported first-quarter net income of $335 million.
The Gillingham, Britain-based company said it had profit of $1.24 per share. Earnings, adjusted for one-time gains and costs, were $1.59 per share.
The results beat Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.46 per share.
Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on DLPH at https://www.zacks.com/ap/DLPH