Automotive Newsletter Q4 2022
M&A activity increased in Q4 2022 compared to Q4 2021, with a total of 78 completed transactions
Overview of M&A activity
Rising energy and transport costs, the ongoing conflict in Ukraine, and low purchase volumes from OEMs, are putting automotive suppliers under enormous pressure. As a result, the number of bankruptcies in the fourth quarter of 2022 has increased compared to previous quarters, representing a further disruption in the supply chain. However, due to the increasing supply of semiconductors, the global automotive market is gradually recovering again, but recession fears are still prevalent.
M&A activity increased in Q4 2022 compared to Q4 2021, with a total of 78 completed transactions. However, the cumulative deal value has decreased in Q4 2022 (€20.4bn) compared to Q4 2021 (€28.1bn). Considerable activity in the areas of electromobility, power electronics, powertrain, and exterior systems solutions, have driven M&A activity in Q4 2022 with acquisitions in companies such as Drivetek, Intercable Automotive, Tenneco, and Varroc Lighting Systems.
Despite all global disruptions and economic uncertainties, valuation multiples are strongly recovering in Europe and North America. Compared to Q3 2022 EV/Sales, EV/EBITDA, and EV/EBIT multiples in Europe, increased by 12.3%, 13.0%, and 21.8% respectively in Q4. In North America, the picture is even stronger, with EV/Sales, EV/EBITDA, and EV/EBIT multiples increasing by 26.1%, 17.3%, and 11.7% respectively. However, in Asia, the negative trend continues with EV/Sales, EV/EBITDA, and EV/EBIT multiples decreasing by 8.7%, 0.5%, and 0.5%, in Q4 2022 respectively.
Global automotive production is expected to pick up again as a result of improved supply chains, such as for semiconductors. In addition to the dynamics in the area of electric vehicles and the associated infrastructure, the software and electronics market for vehicles will also have a lasting impact on the automotive sector. We are also expecting ongoing consolidation in the areas of traditional ICE powertrains and related (metal-working) technologies.
M&A Activity: Quarterly Comparison Q4 2021 – Q4 2022
Top M&A Deals Q4 2022
- Intercable Automotive Solutions srl, the US-based manufacturer of high-voltage power distribution and high-precision connection technologies, was acquired by global technology company, Aptiv. Intercable Automotive Solutions will operate as a stand-alone business unit within Aptiv's Signal & Power Solutions segment, and will continue to go to market under its current industry-leading brand.
- Drivetek AG, the Switzerland-based provider of engineering and product development services for inverters, electric drive solutions, and power electronics, was acquired by BorgWarner, the US-based manufacturer of engineered components for automotive powertrain applications. This investment will be aimed at accelerating the growth of existing power electronics capacities in auxiliary converters.
- Tenneco Inc, the US-based manufacturer of automotive ride and emission control products and systems, was acquired by Apollo Global Management, the US-based investment manager. This acquisition is the next step for Tenneco, accelerating its growth ambitions and improving operation capabilities.
- Varroc Lighting Systems Inc., the US-based supplier of automotive lighting systems, was acquired by Plastic Omnium, the French automotive supplier of plastic components. Through a holistic lighting value chain, Plastic Omnium can provide exterior systems for automotive manufacturers.
- Doga Group, the Spanish-based manufacturer of high value-added wiper solutions for large industrial vehicles, such as excavators, tractors, buses, trains, and trucks, was acquired by Spanish private equity firm, Nazca Capital. This transaction will strengthen Doga’s business success and new growth opportunities.
Selected Recent Global Automotive Bond Issuances Q4 2022
|Company||Date of Issuance||Amount (in €m)||Coupon (in %)||Yield (Latest)||Price (Latest)||Maturity Date|
|Toyota Boshoku Corp.||15.12.2022||71.3||0.44%||0.60%||99.2||15.12.2027|