Automotive Newsletter Q3 2019

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Overview of M&A activity

In Q3 2019, the number of deals in the automotive sector increased by 27% compared to Q3 2018, however, deal value was slightly lower than in the previous quarter.

As seen last quarter, automotive M&A activity in Q3 2019 was also strongly influenced by macroeconomic headwinds, such as uncertainties surrounding Brexit, the continuing trade tensions between the US and China, and general technological uncertainty in the market. OEMs and leading Tier I automotive suppliers see a need to increase efforts to invest in new business models influenced by mega trends such as electrification, autonomous driving, and connectivity, increasingly putting pressure on margins and cash flows. This allows opportunistic financial investors, benefitting from the current valuation environment and lower competition from strategics, to be a driving force of consolidation and M&A in the more traditional product categories of the market.

In Q3 2019, automotive multiples declined in North America, were relatively stable in Asia, and decreased in Europe when compared to Q2 2019: EV/Sales multiples decreased in North America by 8%, in Europe by 7% and in Asia by 2%. EV/EBITDA multiples were slightly lower in Europe, increased slightly in Asia and decreased in North America by 4%.

M&A Activity: Quarterly Comparison Q3 2018 – Q3 2019

Q3 Graph New 2

Top M&A Deals Q3 2019

  • Autokiniton Global Group, LP, a portfolio company of KPS Capital partners and manufacturer of metal-formed components and complex assemblies to the automotive industry, has agreed to acquire Tower International, Inc. for a cash consideration of EUR 758m.
  • Blackstone Group L.P., has acquired a 33% stake in Sona BLW Precision Forgings Ltd, an India-based manufacturer of forged gears, from JM Financial Ltd. The deal is valued at EUR 163m and will result in Blackstone merging Sona BLW with its portfolio company Comstar Automotive Technologies Ltd., which will form the new entity, SONA COMSTAR.
  • Pacific Equity Partners Pty Ltd., an Australia-based private equity firm, has agreed to acquire the Asia-Pacific Segment of Horizon Global Corp, the US-based designer, manufacturer and distributor of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products, for a cash consideration of EUR 208m.
  • Quadrivio Group SPA, an Italy-based alternative investment firm, has worked alongside the management of Rototech, a company engaged in the design and production of automotive plastic components with expertise in rotational molding technology, to complete a management buy-out from the Accornero family.

Selected Recent Global Automotive Bond Issuances Q3 2019

CompanyDate of IssuanceAmount (in €m)Coupon (in %)Yield (Latest)Price (Latest)Maturity Date
Ford Motor29.07.20191,1233.350%3.290%100.1801.11.2022
Daimler AG08.08.20191,0000.375%0.401%99.8208.11.2026
Peugeot S.A.18.09.20196001.125%1.223%99.0818.09.2029

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