Germany's Keiper Recaro Group announced plans Thursday to sell the bulk of its auto-parts business to Johnson Controls Inc. (JCI) and focus on the booming market in commercial aircraft seats.

The family-owned firm is selling its Keiper components unit and parts of the Recaro auto seat business to Johnson Controls, which together generated estimated sales of EUR750 million this year. The sale price was not disclosed.

The renamed Recaro Group will have estimated sales this year of EUR300 million, most of it from selling seats to equip the record backlog of planes ordered by airlines and leasing companies from Airbus and Boeing Co. (BA).

Its Recaro Aircraft Seating arm is boosting production at factories in Poland and the U.S. to complement the record output from its main domestic plant, with the industry adjusting to a safety scandal that had engulfed Japan's Koito Industries (6747.TO), one of the largest suppliers.

Koito executives admitted last February that inspection records had been falsified, forcing it to halt production for several months, delaying many new aircraft deliveries and prompting a review by international regulators of seats already installed on commercial planes.

Recaro and rivals such as BE Aerospace Inc. (BEAV) of the U.S. have stepped into the void created by Koito, pitching in to supply seats that can cost anywhere from $5,000 each for a coach product to more than $100,000 for equipment destined for first-class.

The German firm will also retain its line of high-end child safety seats for cars as well as furniture aimed at the home entertainment market, and license the Recaro brand to Johnson Controls.

The Milwaukee-based company is already one of the largest suppliers of car interiors, and the planned acquisition--seen closing in the first half of 2011--would add to its estimated auto-related sales of $16.6 billion this year, half of them in Europe.

Johnson Controls restructured heavily during the auto industry downturn but has seen sales rebound and had $560 million in cash at the end of the third quarter, and had flagged acquisition plans targeted on the car business in China and its large building controls segment, which provides heating and ventilation equipment.

The Keiper and Recaro assets will add 4,750 staff in seven countries and expand its presence in the specialized niche for mechanisms that recline and adjust seats.

Two-thirds of Keiper Recaro's sales are outside Germany, and its customer list includes all of the top-tier auto makers. The proposed deal doesn't include Keiper's operations in Brazil.

Johnson Controls' shares were recently down 2 cents at $38.34, but have climbed 37% so this year.

-By Doug Cameron, Dow Jones Newswires; (312) 750-4135; doug.cameron@dowjones.com
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