In the heart of summer, the race for consolidation continues among automotive suppliers. The French group Faurecia will buy a majority stake in its German counterpart Hella and proposes to acquire all of it to create a global giant in the sector, presented as the seventh largest player in the world.
Under the terms of the agreement reached on Saturday with members of Hella’s founding family, Faurecia to acquire 60% of the capital at a price of 60 euros per share , by disbursing 3.4 billion euros in cash and through the issuance of new shares. On the other hand, and in accordance with German stock market regulations, Faurecia will launch a cash tender offer for all of the remaining shares at a price of 60 euros per share.
Several buyout candidates
Which values the Lippstadt (Westphalia) group in total at 6.7 billion euros, according to a press release from Faurecia. The financing of the transaction will be through debt, while the closing of the transaction, which will generate “high value for all shareholders”, is scheduled for early 2022, according to a press release.
While the family shareholders had wanted to cede control for several weeks , two other players in the sector had filed a case, according to Reuters: the French Plastic Omnium, which knows the group well for having created a joint company with it in 2004, and the German Mahle. As for the German manufacturer of brakes for trucks and trains Knorr-Bremse, he came forward at the end of June before giving up on competing for this diversification.
41st in the Top 100
Specialized in the manufacture of lighting devices and electronic components, Hella achieved in its last financial year a turnover of 5.8 billion euros, and employs 36,300 employees, a figure which has fallen since the appearance of Covid-19, which has precipitated the accounts of many equipment manufacturers in the red . It ranks 41st in the top 100 equipment manufacturers established by the specialized site “Automotive News”.
For its part, Faurecia achieved total sales of 14.7 billion euros last year, with 114,000 employees in 35 countries. In total, the combined turnover of the new group (pro forma) would represent around 23 billion euros this year, a level which should exceed the 33 billion mark by 2025, continues the former subsidiary of PSA-Peugeot Citroën, managed by Patrick Koller.
Big presence in electronics
The merger will in particular give rise to “a major player in the fields of electronics and software, with a turnover of 3.7 billion euros”. “Together, we will be ideally positioned to respond to the strategic changes that are transforming our industry », Affirms Patrick Koller. In particular the decarbonisation of the global automotive sector.
With the takeover of Hella, Faurecia’s exposure to sales of internal combustion engine vehicles, which started from 25% in 2020, should fall “to less than 20% on the date of the closing of the transaction and approximately 10% in 2025 ”, anticipates the French group. The five major activities of the group (electronics, lighting, seats, vehicle interior, sustainable mobility) will each exceed the threshold of 3 billion euros in turnover, while a sixth pole (valuation of the product life cycle) is newly created.