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Here's What Drove Adient Shares 12% Higher Thursday

By Daniel Miller – Oct 1, 2020 at 4:50PM

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The company closed the sale of its fabrics unit, enabling it to focus on its core business.

What happened

Shares of Adient (ADNT -3.23%), a global producer of automotive seating, were up 12% Thursday after the company announced it closed the sale of its fabrics business.

So what

Adient officially closed the previously announced sale of its automotive fabrics manufacturing business (including its lamination business) to Sage Automotive Interiors for approximately $175 million. While Adient's expertise enables it to make products for every step of the automotive seatmaking process, the move to sell its fabrics business will help it focus on its core high-volume seating business.

For Sage Automotive, a manufacturer of automotive interior materials such as seating, door panels, and headliners, it's a strategic move to bolster its position in Europe. "We look to expand capacity and capability for automotive interior products to the European market to continue our global position as the No. 1 preferred automotive interiors company," said Dirk Pieper, CEO of Sage, in a press release.

Automotive interior

Image source: Getty Images.

Now what

Investors seemed to cheer the strategic decision, pushing Adient's stock price up by double digits, since the company can focus on its core business as well as its rebound from coronavirus impacts. As operations restarted during the third quarter, Adient's financial results improved sequentially by month, and this move could help that momentum carry over during the fourth quarter.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends Adient. The Motley Fool has a disclosure policy.

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