On Thursday, September 14, Autoliv Inc. (NYSE:$ALV) shares soared. Why? The Stockholm-based company announced that it is considering a proposal to divide into two companies. One company would primarily be focused on conventional passive safety systems such as airbags, with the other concentrating on emerging technologies that play a role in the safety of self-driving cars.
And investors seem to have taken a liking to the idea. As of 12:00 p.m. EDT, shares of Autoliv were trading at $127.07, which is up from 12.2% from Wednesday, September 13th’s closing price.
Autoliv Incorporated
Autoliv is an auto industry supplier that focuses primarily on safety systems. The company’s passive safety division is the largest maker of both seat belts and airbags in the world. Additionally, Autoliv’s electronics unit is a key player in the market for advanced driver-assist systems.
Further, the company’s electronics unit is in the middle of the self-driving tech chase, as it has partnered with Volvo Cars and NVIDIA (NASDAQ:$NVDA) to create a Level 4 self-driving system for sale in 4 years. However, the market has not given the company’s high-technology efforts enough credit. Why? Autoliv’s shares have been mainly flat for the last year, despite its passive safety unit gaining market share.
So what’s the market-moving news? Autoliv plans to conduct a “strategic review” with the goal of dividing those two lines of businesses into stand-alone companies. However, there are challenges that come with the review. For starters, investors tend to see the company as a well-run but unexciting conventional auto supplier. That said, with the ever-increasing investor interest in all things related to self-driving cars, it is not exceedingly hard to see that the combined value of the proposed two companies could considerably surpass the value of Autoliv today.
What Does the Future Entail?
As of right now, Autoliv has made it clear that this is not a done deal. But, the company said that if it decides to go forth with the separation after the strategic review is finalized, that separation process will take roughly one year. Autoliv has promised to give timely updates as warranted.
Featured Image: twitter
