(Boursier.com) — Valeo acquires the 50% stake held by Siemens in Valeo Siemens eAutomotive, as provided for in the agreement signed with Siemens on February 9, and integrates 100% of Valeo Siemens eAutomotive, leader in high voltage electrification, within of its Powertrain Systems business. This strategic operation strengthens Valeo’s position as a major player in electrification, with a complete range of low and high voltage electric powertrain solutions, covering all uses and all needs.
With Valeo Siemens eAutomotive, Valeo is integrating a recognized technological and industrial leader, with some 4,000 employees including more than 1,600 engineers, 7 production sites in 4 countries (China, Germany, Hungary and Poland) as well as R&D capabilities (laboratories, test benches, simulation tools) and state-of-the-art production. Present on the main platforms of more than 20 car manufacturers, its electric propulsion systems, motors, inverters and on-board chargers will equip, by the end of 2022, more than 90 models of electric cars and plug-in hybrids. A sign of its dynamism, Valeo Siemens eAutomotive announced at the beginning of June that it had already exceeded the target of more than 4 billion euros in order intake for the 2021-2022 period, with an advance of more than seven months compared to the road.
The integration of Valeo Siemens eAutomotive will enable Valeo to accelerate its growth, its technological roadmap, and to achieve significant synergies, with an objective of a total annual amount of 120 million euros which will be reached by 2025. These synergies will be achieved gradually with full benefit in 2025 (50% in 2023, 75% in 2024 and 100% in 2025).
Thanks to this integration, Valeo is aiming for annual sales growth of more than 12% proforma for its Powertrain Systems activity over the period 2021-2025 and is aiming for sales of more than 8.5 billion euros in 2025 (compared to 5 .4 billion euros in proforma sales in 2021), including approximately 7.5 billion euros in original equipment. 80% of the original equipment sales target for 2025 is already in the order book.
The Proforma EBITDA margin of the Powertrain Systems business will grow rapidly from 5.8% in 2021 to more than 8% in 2022, more than 11% in 2025 and around 13% in 2026, the group forecasts. The free cash flow before proforma taxes for this activity will be in balance from 2022 and will reach around 350 million euros in 2025, allowing the new entity to “self-finance its growth”.
This operation results for Valeo in a net cash outflow of 277 million euros for the acquisition of Siemens’ stake on a debt-free basis, financed by available cash. Net debt increased by around 700 million euros, without substantially modifying the major balances of Valeo’s balance sheet. Valeo plans to reduce its debt from 2023.
Following this operation and based on IHS production assumptions, Valeo is setting the following targets for the new pro forma Valeo Propulsion Systems group, as already announced: 2022 revenue of €6.3 billion for a margin of Ebitda of more than 8% and a break-even free cash flow before tax; more than 8.5 MdsE of CA 2025 for an Ebitda margin of more than 11% and an FCF of approximately 350 ME before tax.
The operation received the authorizations of the competent competition authorities and was the subject of information and consultation of the institutions representing the staff concerned.