(Updates with closing stock price)
DETROIT, Nov 26 (Reuters) - Shares of auto parts supplier Visteon Corp. rose nearly 9 percent on Wednesday after a Goldman Sachs analyst raised his rating on the company, citing negotiations with former parent Ford Motor Co. .
Visteon and Ford have said they were in talks to modify the spinoff agreement that created Visteon in 2000, aiming to make the supplier more competitive.
Goldman Sachs analyst Gary Lapidus raised his rating on Visteon to "outperform" from "in-line," saying the talks will cover a wide range of Visteon's concerns, including how it deals with unprofitable businesses.
"Ford is 'rewriting Visteon's constitution,' moving Visteon from an off balance sheet cost center of Ford, hopefully towards a fully independent, profitable and viable supplier," Lapidus said in a research note.
Visteon's shares closed up 69 cents, or 8.9 percent, at $8.43 in trading on the New York Stock Exchange. The shares last traded at that level in October 2002.
Since its spinoff, Visteon has been in a near-constant state of restructuring. Ford, which still accounts for just under 80 percent of Visteon's business, has been pushing Visteon to slash prices, while Visteon has also been trying to lure non-Ford business and compete against lower-cost suppliers.
As part of the agreement made to win union approval for the spinoff in 2000, some 20,000 hourly workers employed in Visteon plants were deemed Ford workers, with guaranteed lifetime employment. Under the spinoff, Visteon reimburses Ford for the workers' wages and benefits, but faces a $465 million payment for retiree health-care benefits in 2006 with similar amounts due annually over the next 15 years.
Since payments of that size would consume most of Visteon's cash flow, the company had asked to modify the agreement. Talks broadened after Ford, Visteon and the United Auto Workers agreed to new contracts in September.