Automotive Newsletter Q4 2023

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Overview of M&A Activity

Throughout Q4 2023, a price reduction of automotive-relevant raw materials could be observed, compared to the peak. The current environment remains challenging, especially for medium-sized suppliers, due to price increases, shortage of skilled labour, and other issues such as high inflation and increasing refinancing costs. Simultaneously, the transition to electromobility remains an ongoing topic in the automotive industry.

The automotive M&A deal count significantly increased from Q4 2022 to Q4 2023, with 78 and 101 transactions, respectively

The automotive M&A deal count significantly increased from Q4 2022 to Q4 2023, with 78 and 101 transactions, respectively. The cumulative deal value decreased in Q4 2023 (€10.9bn) compared to Q4 2022 (€20.4bn)¹. In Q4 2023, M&A activity was mainly driven by transactions in new mobility, EV, connectivity, and electrification solutions, as well as non-core divestments of large Tier-1s. This includes the sale of Faurecia’s Commercial Vehicle Exhaust business in the Netherlands and the US and the divestment of Veoneer’s Restraint Control Systems business.

In Europe, an increase in valuation multiples from Q4 2023 compared to Q3 2023 was observed as EV/Sales, EV/EBITDA, and EV/EBIT multiples all increased by 4.0%. The North American market demonstrated a positive performance, with EV/Sales, EV/EBITDA, and EV/EBIT multiples increasing by 2.2%, 1.0%, and 8.7% in Q4 2023, respectively. In Asia, a contrary trend was observed with EV/Sales, EV/EBITDA, and EV/EBIT multiples decreasing by 3.6%, 3.7%, and 2.9%, respectively, compared to Q3 2023.

The main challenge and task for the automotive industry is to continue to mitigate cost increases by optimising the entire value chain. Suppliers need to focus on efficiency improvement programmes and strongly aligning their product portfolio with the automotive megatrends to remain competitive. Many existing fields of development remain in place and can be addressed through strategic alliances as well as M&A.

M&A Activity: Quarterly Comparison Q4 2022 – Q4 2023

MA Activity Quarterly Comparison Q4 2022 Q4 2023

Top M&A Deals Q4 2023

  • Veoneer Inc, a Swedish supplier of automotive and electronic safety systems as well as a portfolio company of SSW Partners, sold its Restraint Control Systems business to American Industrial Partners (AIP). This transaction supports AIP's investment strategy and existing investments in the automotive industry, as well as Veoneer and SSW Partners' strategy to find the right long-term investors for its three existing business lines. This also includes Arriver™ Software (now owned by Qualcomm) and Active Safety (now owned by Magna International).
  • May Mobility Inc, a US-based technology provider for autonomous driving, closed a €98.19m (USD 105m) Series D funding round from a consortium of investors including NTT Group, Toyota Ventures, BMW i Ventures, and others. Through this funding round, the start-up has received €275m (USD 300m) since its foundation. With the completion of the financing round, NTT Group secured exclusive distribution rights for the company's proprietary technology for autonomous vehicles in Japan and plans to collaborate with Toyota to develop an ecosystem for autonomous driving.
  • American Battery Solutions, Inc. (ABS), a US-based designer and manufacturer of a variety of heavy-duty and industrial lithium-ion batteries for commercial vehicles, transit buses, and on and off-road vehicles, was acquired by Komatsu Ltd., a Japanese-based manufacturer of construction and mining equipment. With the acquisition of ABS, Komatsu will develop and produce its own battery-powered construction and mining equipment, through combining ABS's battery technology with Komatsu's knowledge and network.
  • Faurecia's commercial vehicle exhaust businesses, based in the Netherlands and US, was acquired by Cummins Inc., a designer, engineer, and manufacturer of engines and related power technologies. This acquisition secures Cummins' long-term supply of after-treatment components and assemblies, adding significant manufacturing resources to its existing product portfolio.

Selected Recent Global Automotive Bond Issuances Q4 2023

CompanyDate of IssuanceAmount (in €m)Coupon (in %)Yield (Latest)Price (Latest)Maturity Date
Forvia SE15.12.202374.12.48%2.40%
Magna International Inc.07.12.202370.00.00%3.88%
Toyota Boshoku Corp. 19.10.202363.31.16%0.88%102.519.10.2033
Valeo SE12.10.2023600.05.88%4.52%
Notes: 1) Including the sale of the Mobility and Materials unit of DuPont de Nemours (Deal Value EUR 9.692m) and the acquisition of Tenneco Inc by Apollo Global Man (Deal Value EUR 5.560m)
Sources: FACTSET, MergerMarket, AlixPartners, Roland Berger, EbnerStolz

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