Automotive Newsletter Q1 2020
Overview of M&A activity
In Q1 2020, the number of completed deals in the Automotive sector increased by 49% and the deal value has more than doubled from EUR 1.9bn to EUR 4.1bn, compared to Q1 2019. This development is largely influenced by the sale of Beijing Pony.AI Science & Technology Co., Ltd. to Toyota Motor Co., Sequoia Capital and Beijing Kunlun Tech Co., Ltd. for a deal value of EUR 2,762m in February 2020.
The main impact on the Automotive sector as well as the global economy in Q1 2020 are the consequences of the global COVID-19 pandemic, starting in Q4 2019. As the first area hit by the outbreak in the end of 2019, the effect of COVID-19 in Asia is reflected in the EV/Sales and especially the profitability multiples in Q1 2020. EV/Sales multiples for the year 2020 decreased in Europe by 16%, in Asia by 22% and in North America by 16% compared to Q4 2019. Furthermore, EV/EBITDA multiples for 2020 decreased in Europe by 2%, in North America by 1% and in Asia by 22%. EBITDA and EBIT margin expectations also decreased significantly for 2020 in comparison to the Q4 2019 forecast. In Europe, EBITDA and EBIT margin forecasts for 2020 declined by 14% and 28%, in North America by 13% and 20% and in Asia by 6% and 16%, respectively, in comparison to Q4 2019. For 2021, the market is expecting a recovery of profitability levels.
It is anticipated that the implications of the lock-downs in Europe and North America will become visible in Q2 2020 and onwards. After plants of all major OEMs closed in mid-March 2020 in Europe, closely followed by North America, selected car manufacturers such as Hyundai in Russia, Audi in Hungary, and Renault in Spain are slowly booting up their production facilities are one month of downtime.
M&A Activity: Quarterly Comparison Q1 2019 - Q1 2020
Top M&A Deals Q1 2020
- BorgWarner Inc., the US-based and listed supplier of engineered automotive systems and components for power train applications, has signed an agreement to acquire Delphi Technologies PLC, the UK-based, Jersey-incorporated and US-listed company engaged in making components and systems for gasoline, diesel and electric engines. BorgWarner intends to acquire all Delphi Technologies’ existing issued and to be issued ordinary shares in an all-stock transaction with a deal value of EUR 2.6bn
- Guangdong Wencan Die Casting Co., Ltd., the listed Chinese company engaged in the research, development, manufacture and sales of automotive aluminum alloy precision die casting products, has filed a binding bid for a 61.96% stake in Le Belier SA, the listed French company which manufactures aluminum parts used in the automobile, aircraft, rail and plumbing supply industries, for a price of EUR 257m
- Sage Automotive Interiors, Inc. a subsidiary of Asahi Kasei Corporation, has agreed to acquire the automotive fabrics manufacturing business of Adient plc., the US-based designer, developer, manufacturer and marketer of seating systems and components for a consideration of EUR 155m
- Triton Partners, a UK-based private equity firm, headquartered in London, has agreed to acquire a 76% stake in RENK Aktiengesellschaft, the listed German manufacturer of specialised gearboxes, drive technology components as well as testing systems, from Volkswagen AG via an auction process. Simultaneously, Triton via Rebecca BidCo GmbH has launched a mandatory public offer for the remaining 24% stake. The deal value is EUR 576m
|Company||Date of Issuance||Amount (in €m)||Coupon (in %)||Yield (latest)||Price (latest)||Maturity Date|
|Aisin Seiki Co.||28.02.20||1,107||0.400%||1.100%||98.20||28.02.2080|
|Deere & Co.||30.03.20||780||3.750%||2.700%||121.20||15.04.2050|