PwC’s Strategy&: Auto supplier M&A activity likely to hit record $48B transaction value globally in 2015
According to a recent study completed by PwC’s Strategy&, global automotive supplier M&A deal value will likely exceed $48 billion in 2015, easily overtaking the previous high in 2007 of $35 billion, as measured by transactions closed within the calendar year.The study identifies that in the last 12 months 42% of all deals were in the Powertrain and Chassis systems of the automobile.
At the same time, the average number of deals and the deal size—after excluding large deals over $500 million in value—will remain approximately the same at 200 and with about $100 million in transaction value, respectively.
The study shows that for the fifth consecutive year, North American suppliers are the strongest consolidators in 2015 as nine out of the top ten consolidators are North American suppliers. PwC Strategy&’s annual list of top auto supplier consolidators includes 23 companies: 12 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.—Dietmar Ostermann, PwC Strategy&’s Global Automotive Advisory Leader
|“In the automotive supplier world, clearly most acquisitions are successful.”
PwC Strategy& analyzed the top consolidators of the past five years and found that 70% of them outperformed their peer group in EBITDA 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.