In 2017 electrification, autonomous driving, connectivity and the drive to lightweight vehicles will continue to be main drivers of M&A among automotive suppliers. Many suppliers will be forced to take a new strategic direction, which will fuel global M&A activity in the automotive industry, both in terms of growth and consolidation.
In particular we expect Chinese companies to continue to play a major role in technology-based M&A, especially in the European automotive landscape. Lighting is one area that Chinese investors have already been focusing on, as highlighted by a failed bid by GO Scale Capital for Philips’ Lumileds business.
Philips had agreed to sell its stake to the Chinese group but this was blocked by the US Committee on Foreign Investment which argued that the deal created security concerns. Philips subsequently announced plans in late 2016 to sell a controlling stake in the business to a consortium led by US private equity group Apollo Global Management in a deal that values the division at $2bn.
GO Scale Capital has since said it will seek other large LED industry acquisitions to combine with China’s manufacturing base. “China will inevitably become the leader of the global LED industry because of its industrial ecosystem and competitive advantages in scale and cost,” said its chairman Sonny Wu.
Meanwhile it was reported in late 2016 that South Korean tech giant Samsung had dropped its interest in acquiring Magneti Marelli, Fiat Chrysler’s car components business. The telematics, in-car entertainment and lighting operations of Magneti were regarded as particularly attractive to Samsung, but reports say Samsung’s subsequent purchase of Harman International Industries put paid to the deal.
Recent deal activity:
- OLEDWorks, the US OLED light engine and panel manufacturing company, acquired the key OLED assets and relevant intellectual property from Royal Philips. Philips disposed of the business, which is based in Germany, to focus on lighting products, systems and services. OLEDWorks has been granted a license by Philips to market its OLED light source components under the Philips brand, and Philips will remain a distributor of the panels through its OEM sales channels.
- Aixtron acquired Californian company PlasmaSi Inc., a designer of OLED applications, and integrated PlasmaSi’s thin-film encapsulation process into its existing OLED product portfolio. Encapsulation is an essential process step for OLED high volume manufacturing, specifically for flexible devices. Aixtron has a track record in the successful commercialisation of deposition technologies in the semiconductor equipment industry.
- Solvay acquired US-based Plextronics Inc. to bolster its OLED electronic display technology and launch a new development platform with a strong Asian foothold. Following the deal Solvay was able to expand its emerging applications such as OLED TV screens, OLED lighting and lithium-ion batteries.
- Kateeva expanded its Korean operation with the acquisition of OLED Plus, an OLED equipment design, sales, service and support company. Kateeva has developed an inkjet printing manufacturing equipment solution for flexible and large-size OLEDs. With the market for rigid OLED devices now maturing, demand for flexible OLED products is on the rise.
- Veeco Instruments Inc. acquired Synos Technology Inc., a designer and manufacturer of Fast Array Scanning™ Atomic Layer Deposition (FAST-ALD™) systems that enable the production of flexible OLED displays for mobile devices.
- Hella acquired Danish company FTZ Autodele & Værktøj, and the remaining 50% of its Polish JV Inter-Team.
- Valeo has made a number of acquisitions over the last year. It acquired German company Peiker, a major supplier of onboard telematics and mobile connectivity solutions, and Spheros, the worldwide leader in air conditioning for buses, from Deutsche Beteiligungs AG (DBAG).
- Magneti Marelli and Changchun Fudi Equipment Technology Development Co., a Chinese investment company active in the automotive components industry, established a JV company for the production and sale of automotive lighting systems. The two companies are already partners in a JV manufacturing powertrain components.
Clearwater International’s specialist Automotive team
With a track record of over 240 transactions completed with a total value of €12bn, Clearwater International’s Automotive team has developed unrivalled relationships with global OEMS, Tier 1 and 2 suppliers and financial sponsors. The common feature of all of our transactions is the in-depth market knowledge within our Automotive team and our global reach that we can bring to bear. Find out more about the team here.