Automotive Newsletter Q4 2021

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Overview of M&A activity

Production bottlenecks caused by disruptions in the semiconductor supply chain and rising raw material costs continued to weigh on the automotive industry in the fourth quarter which is estimated to have cost the entire industry more than $100bn in 2021. Despite the macroeconomic challenges posed by the COVID-19 pandemic, 2021 was also a year of new momentum for the mobility industry. NEV investments across all segments and large IPOs such as Rivian were key drivers of M&A activity.

considerable activity in the areas of electromobility and autonomous driving continues to drive M&A activity

M&A activity increased slightly in Q4 2021 compared to Q3, with a total of 56 completed transactions. The cumulative deal value increased substantially in Q4 2021 (€28.1bn) compared to COVID-impacted Q4 2020 (€9bn). Once again, considerable activity in the areas of electromobility and autonomous driving continues to drive M&A activity in Q4 2021 with investments in companies such as Aurora Innovation and Sun Mobility.

Compared to Q3 2021, EV/Sales, EV/EBITDA and EV/EBIT multiples in Europe increased by 1%, 3% and 14.2%, respectively in Q4. This trend is even stronger in North America, with EV/Sales, EV/EBITDA and EV/EBIT multiples increasing by 6.4%, 8.1% and 18.5%, respectively. While in Asia valuation multiples were decreasing in Q3 2021, the region experienced the highest growth rates, with EV/Sales, EV/EBITDA and EV/EBIT multiples rising by 11.1%, 16.3% and 20.2% in Q4 2021, respectively.

The automotive supply industry is expected to recover from the semiconductor shortage crisis during the second half of 2022. Furthermore, it will continue to thrive in 2022, responding to current disruptive trends. Key drivers include the increasing market share of electric vehicles and associated charging infrastructure, new forms of mobility access such as subscription models and micromobility solutions, and autonomous driving. Emerging technology trends and new business models will lead to more partnerships between key players along the entire mobility value chain.

M&A Activity: Quarterly Comparison Q4 2020 – Q4 2021

MA activity 2021 graph

Top M&A Deals Q4 2021

  • Benteler International AG, the Austria-based automotive supplier divested its Tønder (Denmark) and Louviers (France) automotive plants to Fidelium Partners, a German-based private equity firm. The decision to sell both plants marks the next step in the implementation of the company’s transformation program. The two plants employ a total workforce of more than 320 employees and achieved total revenues and EBITDA of approx. €90m and €6m in 2020.

  • Benteler International AG, has sold its US automotive plants Goshen and Kalamazoo to Shiloh Industries, a portfolio company of MiddleGround Capital. The acquisition strengthens and expands Shiloh’s position as a global manufacturer of lightweight structural components for the automotive industry.

  • Rimac Automobili, the manufacturer of electric hypercars and provider of full technology solutions has acquired a 55% stake in Bugatti Automobiles S.A.S from Volkswagen AG to form a JV, Bugatti Rimac d.o.o., with Porsche which holds 45% of the shares. Under the umbrella of the new company, the Bugatti and Rimac brands will initially produce two hypercar models: the Bugatti Chiron and the all-electric Rimac Nevera. Porsche also holds a 24% stake in Rimac directly.

  • Aurora Innovation Inc., the US-based developer of self-driving technology solutions has been acquired within a SPAC deal by Reinvent Technology Partners Y (RTP) for a total consideration of approx. $11bn. Aurora’s Class A common stock began trading on the Nasdaq on 4th November.

  • Daimler Truck AG, the global market leader for commercial vehicles was listed on the Frankfurt Stock Exchange in a spin-off of 65% of the shares from Daimler AG. As a listed company, Daimler Truck intends to lead the way to zero-emission transportation even more focused and agile in the future.

Selected Recent Global Automotive Bond Issuances Q4 2021

CompanyDate of issuanceAmount (in €m)Coupon (in %)Yield (latest)Price (latest)Maturity date
Luminar Technologies, Inc.17.12.20215521.250%0.886%101.7515.12.2026
Dana Incorporated24.11.20213094.500%4.701%98.3815.02.2032
Aptiv Plc23.11.20211,3253.100%3.587%91.1101.12.2051
Faurecia SE10.11.20211,2002.750%2.318%102.0615.02.2027
Lear Corporation08.11.20213092.600%3.018%96.4115.01.2032
Notes: 1) Deal value in Q1 2021 is largely driven by the PSA/ Fiat Chrysler transaction worth €19.1bn; 2) Deal value in Q3 2021 is driven by the Atieva/ Lucid Motors transaction (€23.5bn)

Sources: FACTSET, MergerMarket, PwC, McKinsey & Company

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