The French supplier of automotive spare parts Faurecia will buy a majority stake in its German counterpart Hella, specializing in lighting, and proposes to acquire all of it to create a global industry giant, according to a statement released by the French group Saturday August 14.
Under the terms of the agreement concluded with the members of the founding family of Hella, Faurecia will acquire the 60% stake in the capital at a price of 60 euros per share, by paying 3.4 billion euros in cash and via the issuance of new shares.
At the same time, the supplier will launch a cash tender offer on all of the remaining shares at a price of 60 euros per share. The entire transaction could then represent an estimated enterprise value of 6.7 billion euros, according to a press release from Faurecia. The financing of the transaction will be through debt.
The agreement concluded in early 2022
Hella, based in Lippstadt and specializing in the manufacture of lighting devices and electronic components, has 36,000 employees. The rapprochement between the two groups will give birth to “A major player in the fields of electronics and software, with a turnover of 3.7 billion euros”, that is “The 7e global automotive supplier ‘, reports Faurecia. In total, the combined turnover represents around 23 billion euros this year.
The closing of the operation, which will generate “High value for all shareholders”, is scheduled for early 2022, according to the press release.
It reflects Faurecia’s desire to transform its strategy in the midst of the market’s transition to zero-emission mobility and to invest “In high growth segments”, with a focus on innovation in mobile technologies.
“Together, we will be ideally positioned to respond to the strategic changes that are transforming our industry”, says Patrick Koller, CEO of the group.
Among the targets: reducing its exposure to sales of internal combustion engine vehicles by 25% in 2020 for Faurecia “Less than 20% on the date of the completion of the transaction and approximately 10% in 2025”. This will be one of the tasks of the 18,500 engineers and specialists of the new set who “Intends to play a leading role in the decarbonisation and sustainability of the mobility sector”.
“Faurecia and Hella complement each other perfectly, particularly in terms of the product portfolio and market coverage”, abounds Rolf Breidenbach, CEO of Hella, quoted in the press release.
Develop Hella in China, Japan and the United States
The combined group will thus keep a German imprint: Lippstadt will be the headquarters of three entities, including electronics and lighting. “Management positions will be entrusted to executives from Hella. “ The founding family will continue to support the development of the European company as a shareholder of Faurecia up to a maximum of 9%.
On the strategy side, this involves capitalizing on Faurecia’s strong presence in China, Japan and on the American continent to sell the Hella brand, and on Hella’s positions in electronics with German car manufacturers to increase the share of Faurecia market.
“Between € 300 million and € 400 million in revenue from revenue synergies are expected by 2025, as well as cash flow optimization of around € 200 million per year on average from 2022 to 2025 “, anticipates the purchaser.
Faurecia was not the only one in contention: the German manufacturer of brakes for trucks and trains Knorr-Bremse, one of the world market leaders, had expressed its interest. The name of another French equipment manufacturer, Plastic Omnium, was also circulating behind the scenes.
But Faurecia had the advantage of having entered into a partnership with Hella in 2018 to develop personalized interior lighting techniques in cars.