Automotive parts manufacturing company, Delphi Automotive has agreed to sell its wholly-owned thermal business to MAHLE for approximately $727m, as as part of its restructuring plan.
The company said that the proceeds from the sale will be used to make acquisitions and to fuel its growth initiatives.
Delphi CEO Rodney O'Neal said: "This agreement represents a great outcome for both Delphi and our Thermal division."
"The transaction positions Delphi with a more focused high-growth product portfolio that addresses the trends of safe, green and connected.
"The acquisition of the business by MAHLE, a leading global supplier of thermal systems, ensures continued industry-leading service to our customers and stability for our employees."
Both the companies also signed another letter of intent, under which Delphi has agreed to sell its stake in Shanghai Delphi Automotive Air-Conditioning System.
Delphi's Thermal division generated $1.6bn in revenues during 2014, with 13 plants around the globe and approximately 6,700 employees.
O'Neal added: "Under MAHLE ownership, Delphi Thermal will become part of a leading systems supplier in the thermal industry, better positioned to serve customers with a global footprint and industry-leading technology portfolio.
"The business is a good strategic fit for MAHLE, which will benefit our Thermal customers and our Thermal employees."
