ArvinMeritor announced a plan in May 2008 to spin off its Light Vehicle Systems (LVS) business to shareholders under the proposed name Arvin Innovation, Inc. The transaction did not proceed as announced: amid worsening financial and automotive-market conditions, the company shifted toward selling LVS businesses instead.
What ArvinMeritor proposed in May 2008
On May 6, 2008, ArvinMeritor said its board had approved a plan to separate LVS from its Commercial Vehicle Systems (CVS) business. CVS would remain with ArvinMeritor, while the new company—proposed to be called Arvin Innovation, Inc.—would be distributed to ArvinMeritor shareholders.
The planned distribution was a pro rata, tax-free dividend of all Arvin Innovation common stock. ArvinMeritor said shareholder approval was not required and expected the transaction to be completed within 12 months. Completion was conditional on satisfactory financial and automotive-market conditions and other customary approvals. Those were proposed terms and expectations, not evidence that a distribution took place. ArvinMeritor’s May 6, 2008 announcement.
At the time, the company reported that LVS had generated $2.2 billion in sales in 2007: $2.0 billion in value-added sales and $200 million in pass-through sales. It also said more than 60 percent of LVS value-added sales were outside North America. These are historical company-reported figures, not current business metrics. The announcement.
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Why management said it wanted a separation
ArvinMeritor presented the proposal as the result of a strategic review and part of its broader “3R” transformation strategy: rationalize, refocus, and regenerate. Chairman, CEO and president Chip McClure said the separation plan was intended to enhance long-term shareholder value. He argued that two independent companies could focus more sharply on their core businesses and growth opportunities and gain greater recognition in their respective global markets. These were management’s reasons for pursuing the plan, not demonstrated results of a completed separation. ArvinMeritor’s announcement.
Phil Martens, then LVS president and the proposed president and CEO of Arvin Innovation, said independence would help the business pursue growth initiatives, improve customer focus, expand globally, and develop next-generation systems technology. James Marley was named as the planned non-executive chairman. Both appointments were proposed roles tied to the planned company, not evidence that Arvin Innovation began operating as a spun-off public company. ArvinMeritor’s announcement.
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What happened to Arvin Innovation?
By January 8, 2009, ArvinMeritor was describing an effort to sell LVS rather than proceed with the announced spin-off. The company said it had been negotiating to sell the business in its entirety, but concluded that unprecedented credit-market challenges and weak industry volumes made it impossible to capture appropriate value from a whole-business sale in that environment. ArvinMeritor’s January 2009 update.
ArvinMeritor’s fiscal 2009 annual report described a broader search for alternatives as financial markets weakened, including selling all or parts of LVS. The company reported progress in selling many LVS businesses; it said Body Systems and a relatively minor portion of Chassis remained among its light-vehicle businesses. The report cited intense competition, industry oversupply, difficult end markets, and financially troubled customers, and said ArvinMeritor was concentrating resources on commercial-vehicle and industrial businesses. ArvinMeritor’s fiscal 2009 Form 10-K.
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In short, Arvin Innovation was the proposed vehicle for a shareholder spin-off, but the company changed course before that plan was completed. The available company filings establish the shift toward sales of LVS businesses; they do not document every asset sale or the present-day ownership of each legacy product line.
How the proposal differed from the later approach
| Question | May 2008 proposal | 2009 change in direction |
|---|---|---|
| Transaction form | Pro rata, tax-free distribution of Arvin Innovation common stock to ArvinMeritor shareholders. | ArvinMeritor pursued a sale of LVS, first considering the business in its entirety and then sales of all or parts. |
| What would remain at ArvinMeritor? | CVS would remain with ArvinMeritor. | The annual report described a focus on commercial-vehicle and industrial businesses; it also reported that Body Systems and a relatively minor portion of Chassis remained among the light-vehicle businesses. |
| Stated circumstances | The company made completion conditional on satisfactory financial and automotive-market conditions and customary approvals. | ArvinMeritor cited credit-market challenges, weak industry volumes, worsening financial markets, competition, oversupply, difficult end markets, and troubled customers. |
| Outcome established in the cited filings | A proposed separation; the announcement did not establish that it closed. | Progress in selling many LVS businesses; the cited filings do not establish the later ownership of every legacy product line. |
How the 2022 Cummins acquisition fits in
Cummins reported completing its acquisition of Meritor on August 3, 2022, for $2.9 billion, including debt retired at closing. Cummins said the acquisition would support investment in electrification and add products to its Components business. That later acquisition is corporate context, not the completion of ArvinMeritor’s 2008 LVS spin-off proposal. Cummins’ 2022 Form 10-K; Cummins’ August 3, 2022 announcement.
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