Mexican conglomerate Alfa said late last week it is planning to spin off its 75-percent stake in Nemak, a local producer of automotive parts.
Alfa is expected to announce the move later this month, which would leave the struggling unit on its own.
“We plan a gradual and orderly transition process to make Nemak an independent business,” explained Alfa President Alvaro Fernandez Garza in a related press release.
Nemak supplies automotive aluminium parts for Fiat Chrysler Automobiles, Ford, General Motors, and Toyota. Due to the recent economic turmoil attached to the COVID-19 pandemic, the division endured a loss of 60 percent of its revenue on the year earlier this year, posting a loss of $125 million in the most-recent quarter.
Industry analysts said the move would be greeted positively by investors, as it unencumbered Alfa of the entity, limbering it up for further coronavirus-related business challenges ahead.
“Nemak is a business that […] weighed negatively on Alfa’s results,” reported one domestic business analyst. “This transaction should be highly positive for Alfa.”
The upcoming sale would leave Alfa with 82 percent of Alpek, which operates in petrochemicals, and the entirety of Newpek, of oil and gas. It also owns 53% of telecom Axtel and the entirety of food wholesaler Sigma.