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Driving value2013 Automotive M&A Insights
In this issue
2 Welcome
3 2013 flash report
4 The road ahead
7 The year in review
12 Insights into regions
14 Analyzing industry segments
15 Who’s buying: Financial versus Trade Buyers
17 In conclusion
18 Contacts and marketing information
Driving value 2 2013 Automotive M&A Insights
Welcome
We are pleased to present Driving Value: 2013 Automotive M&A Insights, PwC’s annual review of mergers and acquisitions (M&A) activity and key trends impacting the global automotive industry. In this edition, we look at:
• The status of global automotive deal activity among vehicle manufacturers, suppliers, financiers, and other related sectors
• Key trends that impacted the deal market
• Transaction activity by sector and region
• Our perspective on the road ahead
This latest edition of Automotive M&A Insights is meant to serve only as a preface to the insights and observations that we can provide to drive successful transactions. M&A leaders in the automotive and financial sectors frequently turn to us for advice on potential transactions and the strategies underpinning those deals. Your feedback is important to us, and we welcome the opportunity to provide you with a deeper look into any of these trends that may be of benefit to your organization.
Paul G. Elie
U.S. Automotive Transaction Services Leader
paul.g.elie@us.pwc.com
+1 (313) 394 3517
Driving value 3 2013 Automotive M&A Insights
Global automotive deal volume dropped
5% to 465
$22 billion 28% from 2012
in aggregate global automotive deal value
2013 Key trends at a glaceAutomotive
Average global automotive deal size of
$141million
Forecast global automotive assembly growth 2013
2020
3.9%
CAGR
2013 largest automotive deal:
Carlyle acquisition of DuPont Performance Coatings
billion
2013 North American automotive assembly
million units16.3
North America automotive M&A activity in 2013 was flat with 2012–
share of target deal volume24%
$12.1
Financial buyers global automotive
M&A activity was flat at 115 deals
in 2013 compared to 2012
3 of 4 global automotivemegadeals completed in 2013 were transacted locally in Asia
70%$4.9TOP 10 DEALSWERE IN ASIAN ASSETS
COMPONENT SUPPLIERS deal value was
– it’sHIGHEST YEAR
2ndGlobal cross-sector M&A declinedcompared to 2012
165 22local deals
cross-border deals
Source: Thomson Reuters and other publicly available resources.
Europe reclaimed the title as the most active region in global automotive M&A
9%
Driving value 4 2013 Automotive M&A Insights
Today’s companies still face barriers on the road to long-term growth; however, we believe the automotive sector is on an upward trajectory, revving up now to drive future growth. PwC’s Autofacts expects the industry to add 25 million units of production between 2013 and 2020, for a compounded annual growth rate of 3.9%.
Automotive, along with the world at large, is changing at a fast pace. Never before has evolution occurred in such short periods of time. We see five emerging megatrends combining their collective pervasiveness to impact and influence the future of M&A activity--discussed in the following pages, and each of which, along with its corresponding considerations, has the potential to drive M&A activity for global sector participants—ranging from raw material procurement to final assembly.
To stay ahead of the pace of change and remain relevant in today’s ultra-competitive marketplace, companies must collaborate across the automotive network to anticipate any roadblocks on the horizon and plan in advance how best to topple them. In all likelihood, the strategies emerging from these collaborative planning sessions will involve M&A transactions. PwC has identified five Megatrends we believe will impact the future of the automotive industry over the next decade.
The road ahead
Demographics shiftsRecent surges in population are expected to slow, except Africa where growth remains prolific. Median age by region continues to rise allowing for more drivers. Income equality has grown in over 75% of Organization for Economic Co-operation and Development
(OECD) countries, including many emerging markets.
Automotive implicationsOn all fronts, young workers will change the organizational structure and labor practices of many employers, requiring more flexibility and incentives to attract and retain “millennials” to the industry and the epicenters in which the industry operates.
Demographic shifts
5%
1950 20502000
10%
15%
20%
25%
Source: UN report World Population Aging 1950-2050
8%
21%
10%
Proportion of the world population aged 60 years or more
Source: UN report, “World Population Ageing” (1950-2050) http://www.un.org/esa/population/publications/worldageing19502050/
Driving value 5 2013 Automotive M&A Insights
Accelerating urbanization Currently, 50% of the world’s population lives in cities; by 2030, the UN projects that 4.9 billion people will be urban dwellers. By 2015, the United Nations (UN) estimates that there will be 22 mega-cities (populations over 10 million),
with 17 located in developing economies. Infrastructure will be strained, where new cities will rise rapidly and require investments to accommodate growth.
Automotive implicationsTechnology and innovation will be of utmost importance as private and public transportation models adjust to new mobility needs. Connectivity, including vehicle to vehicle and traffic management systems, will require significant infrastructure investments to facilitate new transportation networks.
Shifts in economic power
Western economic dominance is a relatively recent phenomenon, and we are now seeing a rebalancing of global economies. This realignment is triggering the transition
of growth countries from centers of production to consumption-oriented economies.
Automotive implicationsVehicle demand is shifting to ascending economies – a trend the industry is already addressing with an increased focus on emerging markets as mature territories concurrently near a saturation point.
Accelerating urbanization
Shift in global economic power
2015: Global megacities
Gross Domestic Product (GDP) of G7 and E7 countries at $US Purchasing Power Parity (PPP)
Source: UN Department of Economic and Social Affairs
Source: PwC Analysis
GDP
$138.2trillion
GDP$69.3trillion
GDP
2009
2050
$29.0 trillion GDP $20.9 trillion GDP
G7Group of 7 (G7):
Canada, France, Germany,Italy, Japan, UK and US
Canada, France, Germany,Italy, Japan, UK and US
E7
G7 E7
Group of Emerging 7 (E7): Brazil, China, India, Indonesia,
Mexico, Russia and Turkey.
Brazil, China, India, Indonesia, Mexico, Russia and Turkey.
Source: PwC Analysis.
8-Megacities 2015
5–<8 million
8–<10 million
≥ 10 million
Urbanpopulation
Lagos
Kinshasa
Jakarta
Bandung
Manila
Tokyo
Shenyang
Beijing
Seoul
Shanghai
Hong-Kong
Ho Chi Minh City
BangkokMadras
Bangalore
Mumbai
Jidda Riyadh
Paris
London
Rhine-Ruhr NorthMoscow
IstanbulRhine-RuhrTotal
BaghdadTeheran
Kabul
Lahore
DhakaDelhi
Wuhan Vittagong
HanoiPune Calcutta
Karachi
Ahm
TianjinLos Angeles
Mexico City
Bogota
Lima
Santiago
Abidjan
Buenos Aires
Belo Horizonte
São PauloRio de Janeiro
Luanda
Guatemala City
Source: UN Department of Economic and Social Affairs.
New York
TorontoToronto
Chicago
Driving value 6 2013 Automotive M&A Insights
Climate change and resource scarcity
Demand for energy is forecasted to increase by as much as 50% by 2030, and water withdrawals by 40%. The impact of this could make traditional methods of manufacturing and commerce difficult or even impossible in
some places. Sustainable solutions will become at odds with the need for resources to drive growth.
Automotive implicationsClimate change and resource scarcity will drive Original Equipment Manufacturers (OEMs) and suppliers to rethink regional manufacturing and distribution strategies. Countries and regions will differ in related regulations, requiring adaptability in both technology and manufacturing models.
Climate change & resource scarcity
With a population of 8.3 billion people by 2030, we’ll need...
Source: National Intelligence Council’s report. “Global Trends 2030: Alternative Worlds” (December 2012) http://www.dni.gov/files/documents/GlobalTrends_2030.pdf
50%moreenergy
40%morewater
35%morefood
Source: National Intelligence Council: Global Trends 2030: Alternative Worlds.
Technological breakthroughs
Entirely new industries are being created, which could have a significant impact on the size and shape of the manufacturing and high-tech sectors. The internet, mobile devices, “big data,” cloud computing and other
breakthroughs will continue to change our world, and companies are grappling with how these factors will affect the consumer experience – and the business models supporting them.
Automotive implicationsOEMs and suppliers will need advanced manufacturing capabilities to leverage global platforms while still catering to local / niche preferences.
Technological breakthroughs
The rise of the ‘Internet of Things’
Source: Cisco’s Internet Business Solutions Group (IBSG) http://share.cisco.com/internet-of-things.html
6.3 billion
500 million
6.8 billion
12.5 billion
7.2 billion
25 billion
7.6 billion
50 billion
0.08 1.84 3.47 6.58
WorldpopulationConnected
devices
Connecteddevices
per person
Moreconnecteddevicesthanpeople
Source: Cisco Internet Business Solutions Group, April 2011.
2003 2010 2015 2020
Driving value 7 2013 Automotive M&A Insights
The year in review
Global automotive
For the second straight year, 2013 saw automotive deal activity continue to decline—albeit at a far slower pace than in the previous year. At 465 transactions, 2013 deal volume was down by just 5% compared to the significant drop of 18% experienced in 2012 when volume fell from the 594 deals transacted in 2011 to 490. In 2013, the total aggregate disclosed value in the sector was approximately $22 billion—a decline of 28% from the 2012 disclosed value of approximately $30 billion.
2013 365 days, 465 deals, $22 billion total aggregate disclosed value
Disclosed deal value
Global automotive M&A deal volume & value2001–2013
Dis
clo
sed
dea
l val
ue ($
bn)
Deal vo
lume
UST facilitated investments Sovereign wealth investment Deal volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
0
20
40
60
80
100
120
140
20132012201120102009200820072006200520042003200220010
100
200
300
400
500
600
700
$19
$35
$21$26
$41$49
$57
$46
$70
462
621588
515
584 594 604
549520
594
490465
$6
532
$45
$30$22$25
$32
Global Automotive M&A Deal Volume and Value 2001–2013
Source: Thomson Reuters and other publicly available resources
Driving value 8 2013 Automotive M&A Insights
Automotive assembly
Historically, M&A activity has trended directionally consistent with automotive assembly volume. However, this trend has not continued over the last two years, primarily driven by slowed activity in Europe. While much of the last two years was centered on lingering questions of when Europe would turn itself around, 2014 appears to be the year where most regions will show year-over-year growth in assembly. As such, PwC maintains a positive outlook for a future increase in M&A activity with 2013 showing signs that the struggling European Union market is finally beginning its recovery.
Looking beyond the European Union, North America and the Developing Asia-Pacific regions are expected to continue expanding throughout 2014. Long-term, Autofacts expects the industry to add 25 million units of production between 2013 and 2020 for a compounded annual growth rate (CAGR) of 3.9%. That being said, there are underlying challenges that the industry is set to face, ranging from changing demographics to economic policies—challenges that are likely to drive M&A activity, as companies look for solutions to stay relevant, implement growth strategies and be compliant.
Global: Regional Assembly Topline Outlook 2014
Developing Asia-Pacific
North America
European Union
Developed Asia-Pacific
South America
Eastern Europe
Middle East & Africa (ME&A)
30.21m 17.03m 16.51m 13.37m 4.69m 3.88m 1.67m
Global Light Vehicle Assembly Outlook 2001–2020
Source: PwC Autofacts® 2014 Q1 Data Release, Thomson Reuters and other publicly available sources, PwC Analysis
Source: Autofacts Quarterly Forecast Update 2014 Q1 Data
Global light vehicle assembly outlook
Ass
emb
ly v
olu
mes
(mill
ions
)
Deal vo
lume
Automotive M&A deal volume (R-axis)
Source: PwC Autofacts 2014 Q1 Data Release, Thomson Reuters and other publicly available sources, PwC Analysis
20
30
40
50
60
70
80
90
100
110
20202019201820172016201520142013201220112010200920082007200620052004200320022001
53 55 56 5863 65
69
58
72
7983
8793
98102 104 106 108
462
621588
515
584 594 60466
549
532
520
75
594
490465
200
300
400
500
600
700
800
900
2013–2012 CAGR = 3.9%
Driving value 9 2013 Automotive M&A Insights
Top 10 transactions—Vehicle manufacturers
Date effective Target name Target region
Acquiror name Acquiror region
% of Shares acquired
Value of transaction
($m)
Buyer type
1 19 Nov 2013 BAIC Motor Co Ltd Asia Daimler AG Europe 12 873 TRADE
2 26 Dec 2013 Changan PSA Automobiles Co Ltd Asia Chongqing Changan Auto
Co Ltd Asia 50 330 TRADE
3 01 May 2013 Aston Martin Europe Investindustrial SpA Europe 35 233 FIN
4 06 Dec 2013 Greenkraft Inc US Sunrise Global Inc US 100 141 TRADE
5 08 Oct 2013 Geely Automobile Holdings Ltd Asia GS Capital Partners VI Fund LP US 6 125 FIN
6 21 Jun 2013 New Flyer Industries Inc ROW Marcopolo SA ROW 20 116 TRADE
7 21 Oct 2013 Thor Industries Inc-Bus US ASV US 100 100 TRADE
8 21 Jun 2013 North American Bus Industries US New Flyer Industries Inc ROW 100 80 TRADE
9 27 Nov 2013 Agnita Ltd Asia CIAM Investment(BVI)Ltd Asia 42 35 FIN
10 01 Mar 2013 Daimler Buses NA-Certain Asts ROW New Flyer Industries Inc ROW 100 28 TRADE
Top 10 transactions—Component suppliers
Date effective Target name Target region
Acquiror name Acquiror region
% of Shares acquired
Value of transaction
($mil)
Buyer type
1 04 Feb 2013 DuPont Performance Coatings US Carlyle Group US 100 4,900 FIN
2 12 Mar 2013 Fawer Automotive Parts Co Ltd Asia Guangdong Sunrise Holdings Asia 100 1,428 TRADE
3 24 Jul 2013 Indomobil Sukses Internasional Asia Gallant Venture Ltd Asia 82 1,258 FIN
4 04 Jul 2013 Hankook Tire Co Ltd Asia Hankook Tire Worldwide Co Ltd Asia 20 1,115 TRADE
5 01 Dec 2013 Visteon -Automobile JV Assets Asia Huayu Automotive Systems Co Ltd Asia 100 928 TRADE
6 05 Jun 2013 Pirelli & Co SpA Europe Multiple Acquiror Europe 7 548 FIN
7 04 Jul 2013 Gestamp Automocion SL-Assets US Mitsui & Co Ltd Asia 30 394 TRADE
8 11 Jan 2013 Visteon-Climate Control Bus US Halla Climate Control Corp Asia 100 368 TRADE
9 12 Jun 2013 WET Automotive Systems AG Europe Gentherm Europe GmbH Europe 95 345 TRADE
10 10 May 2013 Shriram Transport Fin Co Ltd Asia Piramal Enterprises Ltd Asia 10 301 TRADE
Top 10 deals
Driving value 10 2013 Automotive M&A Insights
Top 10 transactions—Others (includes; retail, aftermarket, rental/leasing and wholesale, etc.)
Date effective Target name Target region
Acquiror name Acquiror region
% of Shares acquired
Value of transaction
($mil)
Buyer type
1 01 Apr 2013 Exego Group Pty Ltd Asia Genuine Parts Co US 70 810 TRADE
2 16 Dec 2013 Rhiag Inter Auto Parts Italia Europe Apax Partners LP Europe 100 765 FIN
3 29 May 2013 WBL Corp Ltd Asia UE Centennial Venture Pte Ltd Asia 58 595 FIN
4 14 Mar 2013 Zipcar Inc US Avis Budget Group Inc US 100 512 TRADE
5 01 May 2013 Sator Holding BV Europe Euro Car Parts Ltd Europe 100 268 TRADE
6 17 Jan 2013 Toyota Motor Philippines Corp Asia GT Capital Holdings Inc Asia 30 218 FIN
7 09 Dec 2013 Multiple Targets US Group 1 Automotive Inc US 100 208 TRADE
8 18 Jan 2013 WBL Corp Ltd Asia The Straits Trading Co Ltd Asia 24 180 TRADE
9 20 Dec 2013 Westport Axle Corp US Universal Truckload Svcs Inc US 100 123 TRADE
10 21 Feb 2013 Shriram Transport Fin Co Ltd Asia Sanlam Emerging Markets Ppty ROW 4 112 FIN
Average Deal Size
The average disclosed deal size during 2013 was $141 million, representing a 12% decrease over the 2012 average size of $161 million. Given that only four megadeals (>$1 billion) were transacted during 2013—its lowest level experienced over the last six years—small and mid-sized deals continue to dominate the global automotive M&A landscape.
Global Auto M&A Deals by Disclosed Value 2008–2013
Source: Thomson Reuters and other publicly available sources
0
50
100
150
200
250
300
201320122011201020092008
<100 mn
Global Auto M&A Deals by Disclosed Value2008–2013
100 mn—1 bn >1 bn
Source: Thomson Reuters and other publicly available sources.
117147176147135175
33
35
58
2413
31
4
613
$2837
7
6
Average Deal Size (R-Axis)
Dea
l Vo
lum
e o
f D
iscl
ose
d D
eal V
alue
Averag
e Disclo
sed D
eal Value ($mn)
0
50
100
150
200
250
300
350
400
$149 $140
$186$161
$141
Driving value 11 2013 Automotive M&A Insights
Cross-Sector M&A
The Automotive sector fared better than global cross-sector M&A activity in 2013 which declined by 9% compared to 2012. While this marks the slowest year of deal activity since 2004, deal value stayed relatively flat at $1.94 trillion.
Global Cross-Sector M&A Deal Volume & Value 2001–2013
Source: Thomson Reuters and other publicly available sources
Disclosed deal value
Global cross-sector M&A deal volume & value2001–2013
Dis
clo
sed
dea
l val
ue ($
trn) D
eal volum
e (thousand
s)
Deal volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
20132012201120102009200820072006200520042003200220010
5
10
15
20
25
30
35
40
45
$2.14
$1.28 $1.19
$1.55
$2.21
$2.88
$3.88
$1.79
25.8
22.1
24.026.8
30.0
33.9
38.837.5
33.0 32.2 30.7
28.030.8
$2.28$1.99 $1.94$1.89
$2.83
Driving value 12 2013 Automotive M&A Insights
Insights into regionsEurope
After six consecutive years of assembly and sales contraction in the region, Europe finally began to show signs of growth. In our view, this was primarily driven by a stronger-than-expected second half of the year for a number of countries. With year-over-year (YoY) assembly growth of approximately 4.0% in 2013 signaling the start of a slow recovery in the region over the mid- to long-term range, Autofacts predicts that the European markets are beginning to turn around.
Following two back-to-back periods of decline, the European M&A markets have already begun to show signs of recovery, with an increase in its share of deal volume both as an acquiror and target region compared to 2012. Once again, Europe was the most active region in automotive M&A, having transacted 165 local and 22 cross-border deals. Nevertheless, disclosed deal value in the region experienced a significant drop; notably, net investments in Europe were only $511 thousand in 2013 compared to $1.3 million in 2012. Further, the disclosed value of local deals, which has historically been greater than $10 billion, reached only $1.4 billion—which we primarily attribute to megadeals in 2012 and 2011.
Given the abundance of distressed suppliers in the region, the M&A markets have begun to react to favorable valuations, but continued growth will depend on the loosening of the credit markets and an improvement in overall economic environment.
North America
US investments have leveled off since the resurgence in 2012 from the 2008–2009 Great Recession. At 24%, the US share of deal volume by target region was flat in 2013, while its share of deal volume by acquiror region slipped slightly from 27% in 2012 to 25% in 2013. In all, 95 local and 19 inbound deals were transacted in 2013 compared to 99 and 20, respectively, in 2012. On the other hand, US cross-border investments (historically in the European region) were down 32% from 2012 levels.
From an assembly and sales perspective, all the North American markets saw strong results in 2013, with light-vehicle sales reaching 15.5 million units and with the US recording increases in sales of over
one million units for the fourth straight year. In 2013, for the first time since 2002, North American assembly cleared 16 million units. Autofacts expects continued growth for the region in the short- to long-term range, but this expansion may not necessarily translate into higher levels of M&A activity. After the painful capacity rightsizing that was completed during the economic downturn, companies, on the whole, are operating at consistent and stable levels, thereby reducing the likelihood of increased M&A activity.
Asia
Asia transacted the largest volume and value of outbound deals in 2013, with approximately 58% being in European assets. Three of the four megadeals completed in 2013 were transacted locally in Asia, representing part of the 90 local deals with an aggregate deal value of $8.01 billion. Asia’s 25% share of volume—both as a target and acquiror region—was more in-line with historical levels, after having reached historic highs in 2012.
Looking at the region in terms of maturity level, the Developed Asia-Pacific markets of Australia, Japan, and South Korea are all experiencing contraction, with a number of compounding factors leading to a smaller automotive base. With the rise in labor costs and with nearby markets offering more cost-effective assembly solutions, automotive manufacturing is nearly extinct in Australia. South Korea and Japan are both facing aging, declining populations that are simultaneously more urbanized, causing a dip in overall demand within the automotive sector. Given these circumstances, we are less likely to see M&A activity in these mature markets.
Meanwhile, the emerging markets of China, India, and Association of Southeast Asian Nations (ASEAN1) countries continue to rapidly expand, with manufacturers and suppliers alike hoping to increase their footprint in these areas. Joint ventures and new market entries continue to strive for optimal utilization levels while maximizing recently-installed capacity, which is leading to a lower level of M&A activity overall. However, since the developing markets in Asia will remain as long-term centers of growth for the global industry, we expect this plateauing of activity to be short lived.
1 Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore. Thailand, Vietnam
Driving value 13 2013 Automotive M&A Insights
Share of Deal Volume by Acquiror Region 2008–2013
Share of Deal Volume by Target Region 2008–2013
Source: Thomson Reuters and other publicly available sources Source: Thomson Reuters and other publicly available sources
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320122011201020092008
9%
24% 25% 27% 27% 33% 25%
27% 24% 20% 23% 27% 25%
40% 39% 46% 41% 31% 40%
9%7% 9% 10%12%
Europe
Share of deal volume by acquiror region2008–2013
US Asia Row
Source: Thomson Reuters and other publicly available sources.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320122011201020092008
Europe
Share of deal volume by target region2008–2013
US Asia Row
Source: Thomson Reuters and other publicly available sources.
8% 10% 4% 7% 8% 8%
24% 23%31% 28% 32% 25%
26% 25% 20% 22%24%
24%
42% 42%45% 43%
36%
43%
USLocal: 95 deals, $6.45 billionInbound: 19 deals, $1.20 billionOutbound: 23 deals, $1.91 billion
Asia (Asia & Oceania)Local: 90 deals, $8.01 billionInbound: 24 deals, $2.24 billionOutbound: 24 deals, $1.93 billionRest of the World
Local: 25 deals, $0.60 billionInbound: 12 deals, $0.20 billionOutbound: 21 deals, $0.31 billion
EuropeLocal: 165 deals, $1.40 billionInbound: 35 deals, $1.63 billionOutbound: 22 deals, $1.12 billion
Driving value 14 2013 Automotive M&A Insights
Analyzing industry segmentsIn 2013, deal activity among the categories has shifted away from Vehicle Manufacturers and Components Suppliers towards Others—including retail/dealership, aftermarket, rental/leasing and wholesale, etc. Vehicle Manufacturers and Components Suppliers experienced steep drops in deal volume (28% and 14%, respectively) compared to 2012, while the Others category saw deal volume increase by 23%.
We see the sharp decline in Vehicle Manufacturers as being largely driven by the slow-down in activity within Asia, which historically has been the largest target region within the category. Component Suppliers experienced a volume decline of 14% in 2013 compared to 2012 but, on a positive note, deal value soared to its second highest year, hitting $12.1 billion—a rise driven in large part by the $4.9 billion Carlyle acquisition of DuPont Performance Coatings.
Vehicle Manufacturers M&A Activity 2008–2013
Others M&A Activity 2008–2013
Component Suppliers M&A Activity 2008–2013
Source: Thomson Reuters and other publicly available sources Source: Thomson Reuters and other publicly available sources
Source: Thomson Reuters and other publicly available sources
Disclosed deal value
Vehicle manufacturers M&A activity2008–2013
Dis
clo
sed
dea
l val
ue ($
bn)
Deal vo
lume
Porsche/VM transaction
Deal volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
74 86
97
70
0
10
20
30
40
50
60
70
80
90
100
91
0
20
40
60
80
100
120
201320122011201020092008
56
88.2
15.712.1
15.4
6.3
8.9
4.8
Disclosed deal value
Others M&A activity2008–2013
Dis
clo
sed
dea
l val
ue ($
bn)
Deal vo
lume
Deal volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
261
157
0
5
10
15
20
25
0
50
100
150
200
250
300
350
201320122011201020092008
151
193205
$14.1
287
$4.3
$8.3
$19.2
$5.9$4.9
Disclosed deal value
Component suppliers M&A activity2008–2013
Dis
clo
sed
dea
l val
ue ($
bn)
Deal vo
lume
Deal volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
214
303
236
202
0
5
10
15
20
25
278
0
50
100
150
200
250
300
350
201320122011201020092008
189
$19.6
$11.6
$4.4
$10.2$9.2
$12.1
Driving value 15 2013 Automotive M&A Insights
Who’s buying:Financial versus Trade BuyersFinancial buyers’ activity in 2013 was flat with that seen in 2012, while trade buyers’ deal volume continued to fall from the highs experienced in 2011. Financial buyers’ deal value of $9.2 billion was more in line with 2010 and 2011 levels, representing a 119% increase from 2012. This increase in deal value comes after a sharp decline in value ($9.5 billion) in 2012 compared to 2011. Again, we attribute this primarily to the Carlyle $4.9 billion acquisition.
Trade Buyers M&A Activity 2008–2013
Financial Buyer Share of M&A Activity 2008–2013
Financial Buyer M&A Activity 2008–2013
Source: Thomson Reuters and other publicly available sources Source: Thomson Reuters and other publicly available sources
Source: Thomson Reuters and other publicly available sources
Trade value
Trade buyers M&A activity2008–2013
Dis
clo
sed
dea
l val
ue ($
bn)
Deal vo
lume
Trade volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
0
5
10
15
20
25
30
35
0
50
100
150
200
250
300
350
400
450
500
201320122011201020092008
373
431
$434
379350
366
$27.2$26.1
$14.8
31.2
$26.1
$12.5
Financial buyer share of total value
Financial buyer share of M&A activity2008–2013
Sha
re o
f M
&A
act
ivit
y
Source: Thomson Reuters and other publicly available sources.
Financial buyer share of total volume
0
10
20
30
40
50
60
70
80
0
5
10
15
20
25
30
35
201320122011201020092008
24%
21%
30%
14%
27%25%
31.2
78%
17%
40%
27%
42%
Financial value
Financial buyer M&A activity2008–2013
Dis
clo
sed
dea
l val
ue ($
bn)
Deal vo
lume
Financial volume (R-axis)
Source: Thomson Reuters and other publicly available sources.
0
10
20
30
40
50
60
70
80
90
100
0
20
40
60
80
100
120
140
160
180
201320122011201020092008
117118
$13.7
141
115
$94.7
166
$5.5 $10
160
$9.2$4.2
Driving value 16 2013 Automotive M&A Insights
Trade Buyer–Share of Deal Volume by Category 2008–2013
Financial Buyer–Share of Deal Volume by Category 2008–2013
Trade Buyers–Share of Deal Volume by Target Region 2008–2013
Financial Buyer–Share of Deal Volume by Target 2008–2013
Source: Thomson Reuters and other publicly available sources
Source: Thomson Reuters and other publicly available sources
Source: Thomson Reuters and other publicly available sources
Source: Thomson Reuters and other publicly available sources
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320122011201020092008
Vehicle manufactures
Trade buyer—share of deal volume by category2008–2013
Component suppliers Others
Source: Thomson Reuters and other publicly available sources
40.3
30.6
14%22%
15%18%
11.514%
25.4
27.144%
46%54%56%
36%38%
24.633.5
8.842%32%31%27%52%48% 9.7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320122011201020092008
Vehicle manufactures
Financial buyer—share of deal volume by category2008–2013
Component suppliers Others
Source: Thomson Reuters and other publicly available sources.
40.3
30.6
18%14%14%
17%
8%13%
25.4
27.142%
54%
43%
48%
34%
42%
24.633.5
8.840%32%44%35%58%46% 9.7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320122011201020092008
Europe
Trade buyers—share of deal volume by target region 2008–2013
US Asia Row
Source: Thomson Reuters and other publicly available sources.
8%
26%34% 31% 35% 26%27%
24%
42% 39% 42% 41%37%
42%
26% 21% 21%21%
24%
9% 3% 7% 7% 8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320122011201020092008
Europe
Financial buyers—share of deal volume by target region 2008–2013
US Asia Row
Source: Thomson Reuters and other publicly available sources.
8%
17%21% 19% 20% 20%13%
35%
44%49%
55%48%
35%
46%
23% 18% 26% 36% 27%
10% 6% 8% 9% 7%
During 2013, financial buyers continued to focus most of their efforts on the Component Suppliers and Others categories. However, Vehicle Manufacturers did see a slight increase in its share of financial buyers’ deal volume compared to 2012.
In line with the overall trends seen in 2013, financial buyers—on seeing their share of deal volume recover to levels experienced in
2011—refocused their activity on Europe. Contrary to overall trends, financial buyers’ activity within Asia stayed consistent with 2012, but their activity within the US slowed, while trade buyers were more focused on Asia and Europe in 2013, particularly in the Component Suppliers and Others categories.
Driving value 17 2013 Automotive M&A Insights
In conclusionThough the economic and regional challenges of the past several years has led to a lower level of M&A activity, we expect that continued investment in R&D for next-gen technologies and innovation, along with industry fragmentation, will ultimately drive M&A activity in the future.
These are the key factors that we anticipate will spark automotive M&A growth going forward:
• Strategic approach to mitigating the risk of developing megatrends
• High levels of liquidity on corporate balance sheets
• Strategic initiatives to expand market share and grow customer, technological and product portfolios
• Reemergence of Europe from economic collapse
Driving value 18 2013 Automotive M&A Insights
Contact usTo have a deeper discussion about our point of view on automotive M&A, please contact:
Authors Automotive leadership
Automotive transaction services
Paul Elie US Automotive Transaction Services Leader
paul.g.elie@us.pwc.com +1 (313) 394 3517
Harry Gruits Director, Automotive Transaction Services
harry.l.gruits@us.pwc.com +1 (313) 394 3023
Christopher Becker Experienced Associate, Automotive Transaction Services
christopher.j.becker@us.pwc.com +1 (313) 394 3237
Richard Hanna Global Automotive Leader
richard.hanna@us.pwc.com +1 (313) 394 3450
Felix Kuhnert European Automotive Leader
felix.kuhnert@de.pwc.com +49 (711) 25034 3309
Brian Decker U.S. Automotive Advisory Leader
brian.d.decker@us.pwc.com +1 (313) 394 6559
Dietmar Ostermann Global Automotive Advisory Leader
dietmar.ostermann@us.pwc.com +1 (313) 394 3220
Alexander Unfried Global Automotive Tax Leader
alexander.unfried@de.pwc.com +49 (711) 25034 3216
Humberto Tognelli Brazil
humberto.tognelli@br.pwc.com +55 (11) 3674 3855
Damiano Peluso Canada
damiano.peluso@ca.pwc.com +1 (416) 814 5776
Leon Qian China
leon.qian@cn.pwc.com +86 (10) 6533 2940
Tang Xun China
xun.tang@cn.pwc.com +86 (21) 2323 3396
Steven Perrin France
steven.perrin@fr.pwc.com +33 (0)156 578 296
Martin Schwarzer Germany
martin.schwarzer@de.pwc.com +49 (0) 69 9585 5667
Sanjeev Krishan India
sanjeev.krishan@in.pwc.com +91 (12) 4330 6017
Francesco Giordano Italy
francesco.giordano@it.pwc.com +39 348 1505447
Taizo Iwashima Japan
taizo.iwashima@jp.pwc.com +81 (3) 6266 5572
Jason Wakelam UK
jason.wakelam@uk.pwc.com +44 (0) 77 1471 1133
Paul Elie US
paul.g.elie@us.pwc.com +1 (313) 394 3517
Corporate finance
Automotive marketing and media relations inquiries
Damian Peluso Canada
damian.peluso@ca.pwc.com +1 (416) 814 5776
Martin Schwarzer Germany
martin.schwarzer@de.pwc.com +49 (0) 69 9585 5667
Marco Tanzi Marlotti Italy
marco.tanzi.marlotti@it.pwc.com +39 (02) 8064-6330
Taizo Iwashima Japan
taizo.iwashima@jp.pwc.com +81 (3) 6266 5572
Darren Jukes UK
darren.jukes@uk.pwc.com +44 (20) 7804 8555
Mike Milani* US
michael.milani@us.pwc.com +1 (312) 298 2755
Kristin McCallum Ritter Global and US Automotive Marketing Leader
kristin.m.ritter@us.pwc.com +1 (313) 394 6349
Meghan Bested Automotive Marketing Manager
meghan.bested@us.pwc.com +1 (313) 394 3209
About PwC’s Automotive Practice
PwC’s global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality. One of PwC’s global automotive practice’s key competitive advantages is Autofacts®, a team of automotive industry specialists dedicated to ongoing analysis of sector trends. Autofacts provides our team of more than 4,800 automotive professionals and our clients with data and analysis to assess implications, make recommendations, and support decisions to compete in the global marketplace.
About the Transaction Services Practice
The PwC’s Transaction Services practice provides due diligence on both the buy and sell side of a deal, along with advice on M&A strategy, valuation, accounting, fi nancial reporting, and capital raising. For companies in distressed situations, we advise on crisis avoidance, fi nancial and operational restructuring and bankruptcy. With approximately 1,000 deal professionals in 16 cities in the US and over 6,000 deal professionals in over 90 countries, experienced teams are deployed with deep industry and local market knowledge, and technical experience tailored to each client’s situation. Our fi eld-proven, globally consistent, controlled deal process helps clients decrease minimize their risks, progress with the right deals, and capture value both at the deal table and after the deal closes.
About Autofacts®
Autofacts is a key strategic asset of PwC’s global automotive practice. Fully integrated with PwC’s more than 4,800 global automotive professionals, Autofacts provides ongoing auto industry analysis our clients use to shape business strategy, assess implications and support a variety of operational decisions. The Autofacts team also draws from the strengths of PwC’s marketing, sales and financial services groups to support other key areas of automotive companies’ functions. Since 1985, our market-tested approach, diverse service offerings and dedication to client service have made Autofacts a trusted advisor throughout the industry. For more information, visit www.autofacts.com.
“PwC was recognized as having the largest Transaction Advisory Services Practice by revenue. PwC was also named a “Vanguard” firm and recognized by Kennedy as having the highest breadth and depth of service capabilities”.
Source: Kennedy; “Transaction Advisory Consulting Marketplace Report
2009–2012”; © BNA Subsidiaries, LLC. Reproduced under license
Visit our automotive industry website at www.pwc.com/auto
*Corporate finance services in the US are provided through PricewaterhouseCoopers Corporate Finance LLC (“PwC CF”). PwC CF is owned by PricewaterhouseCoopers LLP, a member firm of the PricewaterhouseCoopers Network, and is a member of FINRA and SIPC. PwC CF is not engaged in the practice of public accountancy. US persons, please contact the FINRA registered representatives noted with an *.
All dollar amounts are expressed in US dollars, unless otherwise noted.
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This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
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DT-14-0072
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