DGAP-News: Blitz F21-441 GmbH (zukünftig firmierend unter Faurecia Participations GmbH) / Key word(s): Takeover COMBINING FAURECIA AND HELLA TO CREATE A GLOBAL LEADER IN FAST-GROWING AUTOMOTIVE TECHNOLOGIES, FULLY ALIGNED WITH INDUSTRY MEGATRENDS 2021-08-14 / 22:31 The issuer is solely responsible for the content of this announcement.
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Press release Nanterre (France), August 14, 2021
COMBINING FAURECIA AND HELLA TO CREATE A GLOBAL LEADER IN FAST-GROWING AUTOMOTIVE TECHNOLOGIES, FULLY ALIGNED WITH INDUSTRY MEGATRENDS
FAURECIA TO LAUNCH A PUBLIC TENDER CASH OFFER ON HELLA AND ACQUIRE ITS 60% STAKE FROM THE FAMILY POOL
- Creation of the #7 global automotive supplier, with a highly advanced technology portfolio addressing all industry megatrends
- Combination of two highly complementary companies, sharing the same focus on innovation, operational excellence, customer satisfaction and ESG
- Hella's identity, businesses and employees will play a major role within the combined Group, Lippstadt will be global headquarter for three out of six Business Groups
- A major player in Electronics and Software with combined sales of EUR3.7bn and critical size for all four other OEM activities with sales > EUR3bn each
- A unique zero-emission offer combining Faurecia's hydrogen leading technologies with Hella's electrification solutions
- Strong accretion (earnings and cash-flow) and value creation for shareholders
Faurecia, one of the world's leading automotive technology companies, announced today that it has reached an agreement with the Family pool and with Hella to:
- Launch a public tender cash offer for all Hella shares at a price of EUR60 per share; total consideration of EUR60.96 (incl. the dividend of EUR0.96 expected to be resolved by the Hella annual general meeting on September 30, 2021 and to be paid by Hella to all its shareholders pre-closing) corresponds to a premium of 33% vs. the latest unaffected^[1] share price of EUR45.8 and of 24% vs. the unaffected 3-month VWAP (volume weighted average price) of EUR49.1,
- Acquire from the Family pool its 60% stake at a price of EUR60 per share, paid through a mix of EUR3.4bn of cash and up to 13,571,428 newly issued Faurecia shares^[2] (based on a reference price of EUR42.06^[3] for one Faurecia share).
As a result, the Family pool will join Faurecia's shareholders with up to 9% share of capital, subject to an 18-month lock-up. A Family representative will join Faurecia's Board of Directors, underlining the Family's strong commitment to the combined company.
This combination marks an unprecedented step in Faurecia's ambition to accelerate its strategic transformation, investing in fast-growing segments with leading positions.
The transaction represents an estimated total enterprise value of EUR6.7bn for 100% of Hella. It has been unanimously approved by Faurecia's Board of Directors and received the support of Hella's management.
The combined Group will focus on four growth areas, fully aligned with automotive megatrends:
- Electric Mobility (incl. hydrogen solutions),
- ADAS & Autonomous Driving,
- Cockpit of the Future,
- Lifecycle Value Management. It will become a major player in the Electronics and Software fields with sales of EUR3.7bn and c. 3,000 software engineers. It will reach critical mass and hold leading positions in all its activities. It will be the 7^th largest global automotive supplier (in the top-5 in Europe and in the top-10 in Americas and Asia), with a significantly enhanced profile in terms of businesses and customer reach.
Patrick Koller, CEO of Faurecia, declared: "This combination is a unique opportunity to create a global leader in automotive technologies. I am convinced that Faurecia and Hella have an outstanding fit as we share common vision, values and culture. Our two talented teams have been cooperating very efficiently since end 2018, they have demonstrated their combined capabilities. Together, we will have the critical edge to benefit from the strategic drivers that are transforming the automotive industry. By combining our product portfolios and market reach, we will accelerate profitable growth, through innovation, with more electronic and software content and enhanced execution quality. Our financial profile will remain solid, with strong attention paid to sustained cash generation and deleveraging the company. I am confident that this combination will create sustainable value for Faurecia's and Hella's customers, employees and shareholders." Dr. Jürgen Behrend, Chairman of the Family pool, declared: "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. This move will further improve the strategic positioning of the company - for the benefit of Hella and its 36,000 employees. At the same time, the family will continue to accompany the development of this leading European company as a shareholder in Faurecia, With Faurecia as the new majority shareholder, Hella will be able to play to its strengths even more effectively. The competences of both companies complement each other perfectly. We have secured long-term commitments for HELLA'S locations and its investments in future business areas. Hella, thus, has the ideal prerequisites to continue to be successful in the long term." Dr. Rolf Breidenbach, CEO of Hella, declared: "Faurecia and HELLA are a very good fit. This especially applies to product range and market coverage. In addition, both partners place a high value on consequent customer orientation, operative excellence and technology leadership. Therefore, it is only logical that we join forces to drive the future of mobility together. With Faurecia at our side, we will have even more opportunities to do so than before." The debt financing of the transaction is fully secured through a bridge facility with tier-one banks. Faurecia's current credit ratings are expected to be confirmed by all three agencies shortly. The structure of the transaction^[4] will allow Faurecia to launch from day 1 the execution of a significant cost synergies and optimization plan to generate > EUR200m EBITDA run-rate, with an 80% P&L impact to be achieved in 2024. Revenue synergies are expected between EUR300m and EUR400m of sales by 2025, and cash-flow optimizations are expected around EUR200m per year on average from 2022 to 2025. Strategic rationale
1/ Combining Faurecia with Hella's strong identity, businesses and employees
Faurecia values the high technology content of Hella activities and intends to further enhance and globalize them. Faurecia will accelerate the multi-pillar business strategy of Hella with a focus not only on automotive original equipment (Lighting and Electronics), but also on additional market segments (Aftermarket, Services and Special Applications).
Lippstadt will continue to play a major role and will be the Headquarter of three Business Groups of the combined Group: Electronics, Lighting and Lifecyle Value Management. The management and business CEOs of these three BGs will be based in Lippstadt.
Faurecia's objective is to leverage Hella's talents that are essential to achieve the combined profitable growth ambition. A key success factor of the combined Group docking and integration is Hella's management stability and involvement. Senior management roles will be dedicated to Hella executives. An integration committee equally composed by members of the management of both companies will be created to supervise the integration project. Positions will be staffed according to best of class principle.
Faurecia is willing to continue the constructive dialogue with all of Hella's workforce constituencies and to stand by its current works council and collective bargaining agreements.
2/ Creating the 7^th largest global automotive technology supplier focused on fast-growing automotive technologies, with leading positions and with a significantly increased 'powertrain-agnostic' share of revenues
- Developing a strong and focused offer for Electric Mobility (BEV + FCEV)
The combined Group will develop a comprehensive offer for electric vehicles (HEVs, PHEVs, BEVs and FCEVs), building on Hella's energy management portfolio, sensors and actuators related to BEVs, as well as Faurecia's hydrogen system solutions(FCEV) and hybrid systems. Battery management systems, DCDC converters, onboard charging systems brought by Hella as well as battery pack systems, hydrogen storage systems and stack systems brought by Faurecia are examples of the combined product offer.
With its portfolio of solutions, the Group will be uniquely positioned to benefit from the zero emissions mobility market transition.
- ICE sales exposure will decrease from 25% in 2020 to less than 20% at closing and down to c. 10% in 2025
- Becoming a major player in Electonics and Software solutions to accelerate in ADAS & Autonomous Driving
In ADAS & Autonomous Driving, the combination of Faurecia Clarion Electronics with Hella Electronics and Software will create a strong global player supporting the next high-speed and low-speed ADAS convergence.
Radars, Electric Power Steering (including fail operational), e-mirrors, 360 views & automated parking solutions are a few examples of the combined product and system offer.
With combined sales of EUR3.7bn in Electronics and Software, the new Group will operate 24 production sites and 21 R&D centers. Our ambition, with orders already significantly booked, is to grow sales to c. EUR7bn in 2025.
- Boosting Faurecia's Cockpit of the Future strategy thanks to complementary portfolios
Faurecia's leading positions in Seating and Interiors (including SAS) combined with Hella's leading position in Interior Lighting and both companies' Electronics will significantly strengthen our Cockpit of the Future strategy.
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