Forvia : French Auto Parts Maker Forvia Plans Sale of Lifecycle Solutions Amid Deleveraging Strategy

Forvia (B1/BB-), the French auto parts manufacturer, aims to sell its Lifecycle Solutions business unit , which focuses on sustainable mobility and the circular economy, according to BBG. In 2024, Lifecycle Solutions represented only 4% of Forvia's revenues (12% of Hella's revenues). Depending on the transaction price and the use of proceeds, the asset disposal could help Forvia achieve its deleveraging target . However, this move raises questions, as sustainability is one of the key pillars of their net-zero strategy by 2045. In the most recent management call, the company stated that sustainability remains a top priority for them. Moreover, even if it is not the right time to sell the asset, we believe that the proceeds from the disposal, combined with the cash on the balance sheet, would provide the company with significant options for navigating future maturity walls. Lifecycle Solutions is one of Forvia's assets that is less affected by tariff-related news flow and remains a growth opportunity for potential buyers, despite the short-term ESG backlash, which implies a high probability of the deal occurring with some execution risk . We view this news as credit positive for the issuer ; however, the final impact on Forvia's credit profile will depend on the transaction price and the use of proceeds. W e recommend selling the EOFP 5.5 EUR % Notes due in 2031 as we remain underweight on the sector and the issuer despite the “ temporary ” trade truce.