Automotive Newsletter Q3 2021

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Overview of M&A activity 

As of the end of Q3, the ongoing semiconductor shortage is assumed to have lost 7.4 million units of global light vehicle production so far in 2021. Currently, global light vehicle sales are forecasted to reach 80.8 million units (+8.3% y-o-y) in 2021, meaning the YTD production losses have already hit 2021 volume growth by 10.0 percentage points, excluding those losses yet to be incurred in Q4.

global light vehicle sales are forecasted to reach 80.8 million units in 2021

M&A activity remained at equal levels in Q3 2021 compared to Q2, with a total of 53 completed transactions. The cumulative deal value has increased substantially in Q3 2021 (€41.1bn) compared to COVID-impacted Q3 2020 (€2.1bn) and has shown good momentum with more sizable deals in comparison to Q2 2021. Once again, considerable activity in the areas of electromobility and autonomous driving continues to drive M&A activity in Q3 2021 with investments in companies such as Kopernikus Automotive, Atieva, and Microvast.

In Q3 2021, EV/Sales and EV/EBIT multiples increased by 5.4% and 5.3%, respectively, whereas EV/EBITDA multiples stayed at stable levels compared to the previous quarter. In North America, EV/EBIT multiples rose substantially by 13.8%, whereas EV/Sales and EV/EBITDA multiples maintained their levels from Q2 2021. While in Asia valuation multiples were increasing in Q2 2021, EV/Sales, EV/EBITDA and EV/EBIT multiples decreased by 8.8%, 5.8% and 16.2%, respectively.

In Q4 the global semiconductor shortage is expected to continue to impact OEMs and suppliers, as new coronavirus infections halt chip assembly lines in Southeast Asia, forcing more car companies and electronics manufacturers to suspend production.

M&A activity: quarterly comparison Q3 2020 – Q3 2021

MA activity chart

Top M&A deals Q3 2021

  • Kopernikus Automotive GmbH, a German car software development company, specialising in autonomous driving technologies for automated valet parking Type 2 (AVP-2) based on artificial intelligence (A.I.) received a minority stake investment from Continental AG. For Continental, the stake in Kopernikus is the logical next step in moving forward with autonomous parking solutions based on vehicle sensor data and solutions based on intelligent infrastructure.

  • Rivian, the US-based developer of electric self-driving trucks has closed a $2.5bn private funding round. The financing was led by Amazon’s Climate Pledge Fund, D1 Capital Partners, Ford Motor Company and funds and accounts advised by T. Rowe Price Associates, Inc. The infusion of funds allows Rivian to scale new vehicle programs, expand domestic facility footprint, and fuel international product rollout.

  • Vitesco Technologies GmbH, the Germany-based Powertrain business of Continental AG has been listed on the Frankfurt Stock Exchange after the spin-off from Continental. Vitesco Technologies generated sales of c. €8bn in 2020 and employs nearly 40,000 people at around 50 locations.

  • Atieva (dba, Lucid Motors), the US-based manufacturer of luxury electric vehicles has been acquired within a SPAC deal by Churchill Capital Corp IV (CCIV). CCIV and Lucid are combining at a transaction equity value of $11.75bn with Lucid and CCIV shareholders owning 73.5% and 16.1% stakes in the merged entity, respectively.

  • Microvast, a US-based technology innovator that designs, develops and manufactures lithium-ion battery solutions has completed its previously announced business combination with Tuscan Holdings Corp. within a SPAC deal. Upon closing, the combined company received approximately $822m in cash, comprised of approximately $282m in cash held in trust by Tuscan. The proceeds of a $540m PIPE from leading institutional investors.

Selected recent global automotive bond issuances Q3 2021

Automotive bonds Q3 21 1
Notes: 1) Deal value in Q1 2021 is largely driven by the PSA/ Fiat Chrysler transaction worth EUR 19.1bn; 2) Deal value in Q3 2021 is largely driven by the Atieva/ Lucid Motors transaction worth EUR 23.5bn
Sources: FACTSET, MergerMarket, IHS
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