This year is shaping up to be an especially good one for automotive supplier mergers and acquisitions, according to projections by global strategy consultants PwC Strategy&.
Merger and acquisition deal value will likely exceed $48 billion in 2015 worldwide for global automotive suppliers, easily overtaking the previous high in 2007 of $35 billion, as measured by transactions closed within the calendar year. At the same time, the average number of deals and the deal size--after excluding deals over $500 million in value--will remain approximately the same at 200 and with about $100 million in transaction value, respectively.
The Consolidation in the Global Automotive Supply Industry 2015 study evaluates the financial and operational performance and acquisition history of more than 800 of the largest automotive suppliers worldwide.
The study reveals that for the fifth consecutive year, North American suppliers are so far the strongest consolidators in 2015. Nine out of the top 10 consolidators are North American suppliers.
PwC’s annual list of top auto supplier consolidators includes 23 companies: Twelve are North American, six European, two Japanese, two South Korean and one Chinese.
“Auto supplier consolidation is fueled by a number of factors, including the long-term growth in global vehicle production, five years of double-digit growth for many global suppliers, technological developments related to light weighting, powertrain enhancements, connected car and autonomous driving, as well as a strong uptick in private equity activity,” said Dietmar Ostermann, PwC Strategy&’s Global Automotive Advisory Leader and one of the authors of the study, in a statement.
PwC Strategy& analyzed the top consolidators of the past five years and found that 70% of them outperformed their peer group in EBITDA (earnings before interest, taxes, depreciation and amortization) growth. Five of the top ten consolidators grew EBITDA margins by over 50%). On average, this group executed eight deals each in that period. The most acquisitive company performed 39 deals and grew EBITDA by $1.3 billion and increased margins by 35% at the same time.
The study identifies that in the past 12 months, 42% of all deals were in the powertrain and chassis systems of the automobile.