Automotive supplier Forvia announced on Friday that it has initiated processes to divest parts of its business portfolio, including assets from its car interiors division.

Since the merger of Faurecia and Hella in 2022, which created the world's seventh-largest automotive supplier by revenue, Forvia has made divestment a key priority. The company aims to reduce its net debt/Ebitda ratio to below 1.5 next year with the help of asset sales, down from 1.8 at the end of the first half and 3.1 at the end of June 2022, following the Faurecia-Hella deal.

"Following recent media coverage, Forvia wishes to provide clarity to its employees, partners, and stakeholders regarding the current divestment processes," the group said in a statement. "As previously announced, Forvia is conducting a comprehensive strategic review of its portfolio."

The interiors business, where Forvia ranks as the world's number three, develops and manufactures door panels, center consoles, and dashboards featuring so-called smart surfaces and recycled materials.

One of Forvia's six divisions--alongside seating, electronics, clean mobility, lighting, and aftermarket--the interiors division accounted for nearly 18% of group revenue in the third quarter.

"This is a leading business, it's a relatively consolidated market (...) they are among the three global leaders, they're credible, so I think it's an asset that won't be difficult to sell," Julien Thomas, an analyst at TP ICAP Midcap, told Reuters, estimating the entity's enterprise value at around EUR3.5 billion.

Forvia has so far completed a quarter of its new EUR1 billion divestment program announced in October 2023, with disposals ranging from EUR50 million to EUR200 million. Now overseen by new CEO Martin Fischer, who took office in March, this is the group's second non-strategic asset sale plan, following another EUR1 billion program announced in early 2022 and completed in 2023.

The latter included a EUR500 million transaction involving the sale of the SAS Cockpit Modules assembly and logistics business to Indian group Motherson.

(Reporting by Gilles Guillaume, with Mathias de Rozario; editing by Augustin Turpin)