Automotive Newsletter Q1 2021
Overview of M&A activity
Rising COVID-19 case numbers and repeat lockdowns have continued to impact deal activity in Q1 2021, causing the automotive sector to fall short of its Q4 2020 momentum. Nonetheless, the cumulative deal value increased substantially in Q1 2021 (EUR 26.2bn) compared to Q1 2020 (EUR 4.1bn), mainly driven by the PSA/Fiat Chrysler transaction. Moreover, there is considerable activity in the areas of electromobility and autonomous driving, with investments in pioneering and highly valued companies such as Cruise, Rivian, and Plus.
Across all automotive peer groups, EV/Sales, EV/EBITDA as well as EV/EBIT multiples for Q1 2021 decreased, indicating a trend reversal, as the multiple landscape was inflated throughout 2020. For Q1 2021, EV/Sales 2022 multiples have decreased by 9.4% in Europe, 3.6% in North America and in Asia by 4.1%, in comparison to Q4 2020. EV/EBITDA 2022 multiples have also decreased for all regions, by 12.1% in Europe, 10.3% in North America and 11.9% in Asia.
The automotive sector recovered after the economic slump in the first half of 2020, generating year-on-year growth in new car sales in China, Europe and the United States in Q3 and Q4 of 2020. This trend continued in the beginning of 2021, with electric vehicle sales on the rise. Nevertheless, it is expected that the industry will remain affected by COVID-19 until 2023.
M&A activity: quarterly comparison Q1 2020-Q1 2021
Top M&A deals Q1 2021
- Groupe PSA, the France-based and listed car company, and Fiat Chrysler Automobiles N.V, the Italy and US based listed car company, agreed over the terms of a 50/50 merger. The EUR 19.1bn transaction will be structured as an all-stock cross-border merger of PSA, resulting in a Dutch company (DutchCo), which will be the 3rd largest global OEM with EUR 170bn in revenues.
- T. Rowe Price Associates has led a EUR 2.2bn investment round in Rivian Automotive, a US-based developer of electric self-driving trucks. Fidelity Management and Research Company, Amazon’s Climate Pledge Fund, Coatue Management and D1 Capital Partners as well as several other existing and new investors took part in the capital raise. The investment round brings the total capital raised since 2019 to EUR 6.7bn.
- Microsoft Corporation joined General Motors Company (GM) and Honda Motor Co., Ltd among other institutional investors in a combined new equity investment of EUR 1.7bn in Cruise LLC, bringing its post-money valuation to over EUR 25bn.
- AB Volvo has acquired a 50% stake in Daimler Truck Fuel Cell GmbH & Co. KG, a Germany-based company which is responsible for research and development, production and sales of fuel cell systems for motor vehicles and non-motor applications, for a consideration of EUR 600m on a cash and debt-free basis.
Selected recent global automotive bond issuances Q1 2021
|Company||Date of Issuance||Amount (in €m)||Coupon (in %)||Yield (Latest)||Price (Latest)||Maturity Date|
|Dongfeng Nissan Auto Finance Co. Ltd.||25.01.2021||256||3.720%||3.651%||100.08||25.01.2024|