Faurecia to Take Over Auto Supplier Hella in $8 Billion Deal
Faurecia Buys Hella Stake, Bids for Rest in $8 Billion Deal
(Bloomberg) -- Faurecia SE agreed to take over Hella GmbH in a deal valuing the German automotive supplier at 6.8 billion euros ($8 billion), beating out rival bidders from the European car-parts industry.
Nanterre, France-based Faurecia will purchase a 60% stake from Hella’s founding Hueck family through a mixture of cash and stock, according to a statement on Saturday, which confirmed an earlier Bloomberg News report. Faurecia will make a public offer for the remainder at 60 euros a share plus a dividend of 0.96 euro apiece.
The Hueck family will own as much as 9% of the combined company. Faurecia beat out competition from German car-parts maker Mahle GmbH and France’s Cie Plastic Omnium SA, people with knowledge of the matter said earlier. Last month, Knorr-Bremse AG abruptly called off its pursuit of Hella after investors reacted negatively to the plans.
While shares of Hella slumped at the beginning of the pandemic, they’ve surged in recent months as competition for the company heated up. They closed on Friday at 63.18 euros apiece, above what Faurecia is offering.
Family Roots
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-parts 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,” said Faurecia Chief Executive Officer Patrick Koller.
Parts makers have suffered from a global semiconductor shortage and supply chain disruptions during the pandemic, which Hella said in July 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.
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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,” Juergen Behrend, chairman of the family pool, said in the statement.
New Technology
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 AG 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.
See breakdown of deal here
Faurecia’s 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 Ltd. advised Faurecia. Societe Generale SA and Natixis SA worked on financing for Faurecia, while Bank of America Corp. provided a fairness opinion to the company’s board.
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