(Bloomberg) — Faurecia SE agreed to buy a majority stake in German automotive supplier Hella GmbH & Co. and offered to acquire the rest in an $8 billion deal, beating out rival bidders from the European car-parts industry.
Nanterre, France-based Faurecia will buy a 60% stake from the founding Hueck family through a mixture of cash and stock, according to a statement on Saturday. Faurecia will make a public offer for the remainder at 60 euros a share plus a dividend of 0.96 euro apiece, valuing Hella at about 6.8 billion euros. The Hueck family will take up to 9% of the combined company.
Investors have driven up Hella’s shares since Manager Magazin reported in April that the Hueck family was looking to reduce its holding, spooked in part by the market crash that coincided with the beginning of the pandemic. With rivals including Mahle GmbH and Cie Plastic Omnium SA circling, the stock surged on expectations of a bidding war. It closed on Friday at 63.18 euros, above what Faurecia is offering.
The deal, one of the biggest in the European auto parts industry in recent years, would create a company with annual sales of about 23 billion euros — forecast by Faurecia to exceed 33 billion euros in 2025 — and some 150,000 employees. Faurecia said the combination will be the world’s seventh-largest auto supplier, and better placed to sell electric mobility products and automated driving services to the industry.
“Together, we will have the critical edge to benefit from the strategic drivers that are transforming the automotive industry,” Faurecia Chief Executive Officer Patrick Koller said.
Auto parts makers have suffered from a global semiconductor shortage and supply chain disruptions during the pandemic, which Hella said last month would most likely continue in the current fiscal year. Despite the shortages, Faurecia recently said it expects worldwide auto production to rebound over the coming years and return to pre-Covid levels.
Lippstadt-based Hella, which traces its roots back to 1899, makes lighting and electronic components, as well as radar sensors for driver-assistance systems. The Huecks have controlled Hella since 1923 and took the company public in 2014.
“As family shareholders, we are fulfilling our corporate and entrepreneurial responsibility for Hella by turning the company Hella over to new owners early on, before our family pool agreement expires,” Jürgen Behrend, chairman of the family pool, said in the statement.
Hella’s business making power and battery electronics and radar sensors for advanced driver assistance systems would mesh well with Faurecia’s ambitions, Tom Narayan, an analyst at RBC Capital Markets, wrote in a recent report.
In February, Hella completed the sale of its front camera software business to Volkswagen Group as part of what it called “stringent portfolio management,” while reaffirming its commitment to automated driving.
“Consolidation is likely for the legacy auto supplier space,” Narayan wrote, citing the shift to electric vehicles from internal combustion engines. Automakers “are increasingly in-sourcing EV components and many suppliers are overexposed to ICE component sales which are being phased out.”
Faurecia beat out competition from German car-parts maker Mahle and France’s Plastic Omnium, Bloomberg News reported earlier. Last month, Knorr-Bremse AG abruptly called off its pursuit after investors reacted negatively to the plans.
The offer document is expected to be published mid-September after approval by the German regulator BaFin. The closing of the transaction is expected at the beginning of 2022.
Perella Weinberg Partners advised Hella management, and Lazard advised Faurecia.
(Adds additional details from Hella, analyst report)
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