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    VOW3   DE0007664039

VOLKSWAGEN AG

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Aptiv to bulk up software offerings with $4.3 bln Wind River deal

01/11/2022 | 06:14am EDT

Jan 11 (Reuters) - Auto parts maker Aptiv PLC said on Tuesday it would buy software developer Wind River for $4.3 billion in cash to bolster its offerings as the auto industry revs up spending on self-driving and electrification.

The deal, Aptiv's biggest since it was spun off from Delphi Technologies in 2017, will also help it capitalize on the shift to software-oriented vehicles and diversify its revenue stream through Wind River's multi-sector clientele.

Owned by private equity firm TPG Capital, Wind River develops software and cloud systems for industries such as automotive, aerospace and defense.

The purchase also comes at a time when several automakers are moving software development in-house to tap into a multi-billion dollar market, potentially affecting auto parts suppliers.

Using Wind River's software will allow Aptiv to introduce new products "faster and more cost effectively," Joe Massaro, the finance chief of the auto parts maker, said on an analyst call.

The deal marks a win for TPG, which is making a public market debut later this week. The private equity shop paid around $500 million for Wind River when the business was carved out from Intel Corp in 2018, according to sources familiar with the matter.

Wind River has since been growing its product offerings with a focus on industrial, defense and automotive, as well as 5G, counting Aptiv and Verizon Communications as its customers.

The existing partnership with Aptiv had led to the buyer's interest for a deal late last year, one of the sources added.

Wind River has more than 1,700 customers globally and the company posted about $400 million in revenue for 2021, with the figure forecast to rise to $1 billion by 2026.

"We think the rationale was strong long-term growth potential and diversification into other industries (beyond automotive) with robust secular tailwinds," CFRA Research analyst Garrett Nelson said.

Aptiv, which counts Stellantis NV, Volkswagen AG and General Motors Co among its customers, battled supply chain problems for much of 2021 but demand for its automated driving systems has been a bright spot.

The company has forecast 2021 revenue of $15.1 billion to $15.5 billion, which would be its highest in seven years. It plans to fund the deal through a mix of cash on hand and debt.

Aptiv stock fell by 3.3% on Tuesday.

(Reporting by Abhijith Ganapavaram in Bengaluru and Krystal Hu in New York; Editing by Aditya Soni and Richard Pulllin)


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
APTIV PLC -2.70% 91.41 Delayed Quote.-43.01%
ON SEMICONDUCTOR CORPORATION -2.61% 54.47 Delayed Quote.-17.71%
STELLANTIS N.V. -3.21% 13.136 Delayed Quote.-18.66%
VOLKSWAGEN AG -1.61% 145.44 Delayed Quote.-16.71%
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Financials
Sales 2022 270 B 289 B 289 B
Net income 2022 16 391 M 17 516 M 17 516 M
Net cash 2022 32 124 M 34 328 M 34 328 M
P/E ratio 2022 4,62x
Yield 2022 6,07%
Capitalization 86 298 M 92 594 M 92 218 M
EV / Sales 2022 0,20x
EV / Sales 2023 0,17x
Nbr of Employees 668 294
Free-Float 56,8%
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Number of Analysts 24
Last Close Price 147,82 €
Average target price 216,90 €
Spread / Average Target 46,7%
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Herbert Diess Chairman-Management Board
Arno Antlitz Head-Finance & Information Technology
Hans Dieter Pötsch Member-Management Board
Thomas Schmall-von Westerholt Head-Technology
Kurt Michels Chief Compliance Officer
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