Lear Corporation LEA recently announced that it has entered into an agreement to acquire I.G. Bauerhin (“IGB”), a private supplier of automotive seat heating, ventilation, active cooling, steering wheel heating, seat sensors and electronic control modules.
The acquisition, valued at €140 million, will be on a cash and debt-free basis. The transaction, subject to customary closing conditions, is expected to close in the next six to nine months.
This marks Lear’s second acquisition of a thermal comfort solutions company. It promises to expand its product capabilities into active cooling and complement its existing offerings. In February, Lear acquired nearly all of Kongsberg Automotive’s Interior Comfort Systems business unit (Kongsberg).
IGB’s acquisition seeks to place Lear as one of the leading providers of innovative thermal comfort solutions. Amalgamating its industry-leading seating expertise and Kongsberg’s products and capabilities with IGB’s cutting-edge technology will expedite the commercialization of efficient, high-performance seating systems and is in sync with the priorities of Lear’s OEM customers.
Notably, IGB generated approximately €205 million in revenues in 2021, and the buyout will enhance Lear’s top and bottom-line growth.
Both companies look forward to providing a more efficient and effective integrated occupant comfort solution for their customers.
Lear has been gaining from strategic acquisitions. Just a few days back Lear announced that it acquired that it has acquired Thagora Technology SRL, a privately held company specializing in material utilization hardware and software technologies. Lear noted that the acquisition will offer it access to scalable, smart-manufacturing tools which can be leveraged to drive innovation and quality.
The buyout of M&N Plastics, concluded in March 2021, is set to increase the vertical integration in Lear’s E-Systems unit. Rising consumer demand for vehicle content — requiring signal, data and power management — and increasing electrification efforts by the company augur well. Lear secured $1.3 billion of new business awards in E-Systems unit in 2021, representing a 45% increase year over year. Six of the eight upcoming launches for 2022 would include content in new electric vehicles. Joint ventures with Hu Lane and Shinry are set to bolster the firm’s electrification capabilities. By 2026, Lear targets $1.4 billion of electrification sales, representing a 32% CAGR between 2020 and 2026.
Shares of Lear have plunged 29% over the past year compared with its industry’s 50% decline.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
LEA currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked players in the auto space include BRP Group, Inc. DOOO, Genuine Parts Company GPC and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BRP Group has an expected earnings growth rate of 9.2% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.2% upward in the past 60 days.
BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 15.2% over the past year.
Genuine Parts has an expected earnings growth rate of 13% for the current year. The Zacks Consensus Estimate for current-year earnings has been marginally revised 2.5% upwards in the past 60 days.
Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.34%, on average. The stock has lost 2.2% over the past year.
Standard Motor has an expected earnings growth rate of 1.4% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 2% upward in the past 60 days.
Standard Motor’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has lost 15% over the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Genuine Parts Company (GPC) : Free Stock Analysis Report
Standard Motor Products, Inc. (SMP) : Free Stock Analysis Report
Lear Corporation (LEA) : Free Stock Analysis Report
BRP Inc. (DOOO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research