Automotive Newsletter Q4 2019

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Overview of M&A activity

In Q4 2019, the number of deals in the Automotive sector decreased by 18% compared to Q4 2018, leading to the lowest quarterly deal activity since Q3 2017. However, deal value has been slightly higher than in the last quarter of 2018.

As seen in last quarter, automotive M&A activity in Q4 2019 was also strongly influenced by macroeconomic headwinds, such as; uncertainties surrounding Brexit, the unresolved 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 invest in new business models influenced by megatrends such as electrification, autonomous driving, and connectivity, putting pressure on margins and cash flows. In this context, we observe an increasing number of “distressed M&A” situations, especially in the traditional powertrain area.

In Q4 2019, EV/Sales multiples for 2020 increased in Europe by 15%, in Asia by 30% and in North America by 7% compared to Q3 2019. Furthermore, EV/EBITDA multiples for 2020 increased in Europe by 16%, in North America by 8% and in Asia by 34%.

M&A Activity: Quarterly Comparison Q4 2018 – Q4 2019

Q4 Newsletter website image table v1

Top M&A Deals Q4 2019

  • Rivian Automotive, a US based developer of electric self driving trucks has closed an investment round of USD 1.3 bn. The financing was led by funds and accounts advised by T. Rowe Price Associates, Inc., Ford Motor Company and funds managed by BlackRock also participated in the round. The company will launch its products in the US in late 2020, with introduction to other global geographies starting in 2021. Until now, Rivian has raised a total of USD 2.2bn.
  • Groupe PSA, the France based and listed car company, and Fiat Chrysler Automobiles N.V., the Italy and US based and listed OEM announced an agreement over the terms of a 50/50 merger, valued at EUR 14,746m. The combination will create the 4th largest global automotive OEM by volume and 3rd largest by revenue. The combined company will have annual unit sales of 8.7 million vehicles, with revenues of nearly EUR 170bn, recurring operating profit of over EUR 11bn and an operating profit margin of 6.6%.
  • Mahindra & Mahindra Ltd. (M&M), a listed, India based company engaged in the manufacture, distribution, and sale of tractors, multi utility vehicles, and light commercial vehicles has announced the agreement to acquire 51% in the India operations of Ford Motor Company for EUR 127m. The transaction will allow M&M and Ford to offer new products to customers faster than before and will deliver profitable growth to both companies. The joint venture will drive enhanced competitiveness through greater economies of scale across the automotive value chain, including optimised sourcing, product development, use of relevant technologies, and a global network.
CompanyDate of IssuanceAmount (in €)Coupon (in %)Yield (latest)Price (latest)Maturity Date
Alstom SA14.10.20197800.250%0.430%98.8014.10.2026
Stadler Rail AG20.11.20193110.375%0.060%102.1520.11.2026
Faurecia SA27.11.20197802.375%1.788%103.0115.06.2027
ZWL GmbH18.12.2019206.500%n/a107.0018.12.2025

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