November 21, 2012 - Bosch is the world largest maker of auto parts. As of last week, Bosch has decided to sell its shares of Denso for $1.4 billion. Bosch has been a stakeholder of Denso for almost sixty years! Both companies have said that they will continue to collaborate on further projects but the economic ties that have held them together for almost six decades have been officially broken. Bosch held 46 million shares of Denso stock, which equated to about 5.4% of the company.
According to a Bosch spokesman, the company wanted to reallocate its funds into investments that diversified their portfolio. Bosch will be taking that $1.4 billion and putting into a wide array of both technology and health care companies that it feels have a “promising future”. Does this mean that Bosch is predicting trouble on the horizon for Denso? It’s hard to say. Denso appears to be keeping its head above water.
From the sound of it Bosch is trying to cut the fat of its financial portfolio. They claim that the Denso stock was a, “non-strategic shareholding,” even though Denso has seen a 14% increase in share price during the 2012 fiscal year. Bosch is going to have to make a couple of tough decisions this coming year about whether or not they want to continue to produce solar units, which have been relatively unprofitable for them. Also, the auto parts maker is trying to find their niche in the electric car battery market. The sale of their Denso stock might be an attempt to create a buffer for these looming financial obstacles.