The deal comes as automotive suppliers position themselves to take advantage of industry mega-trends such as electrification, connectivity and autonomous driving, by spinning off or selling “noncore” assets.
Hella’s family shareholders said last year, in seeking a buyer, that the company had reached a size that required external competence beyond the founding family.
Other notable supplier acquisitions in recent years include ZF Friedrichshafen’s purchase of Wabco for more than $7 billion in 2019 and Qualcomm’s acquisition of Veoneer for $4.5 billion, announced last October.
M&A activity peaked in the auto industry in 2021, with a record $123.5 billion in dals in the first three quarters alone, according to the law firm of White & Case. However, the majority of that was linked to reverse SPAC mergers, White & Case said.
Trading in Faurecia had been suspended Monday pending completion of the deal. Hella’s results will be consolidated into Faurecia’s starting on Tuesday.
Faurecia, based in Nanterre, France, ranks No. 8 on the Automotive News list of top 100 global suppliers, with worldwide sales to automakers of $17.59 billion in 2020.
Hella, based in Lippstadt, Germany, ranks 41st, with automotive sales of $5.47 billion. It is best known for lighting products, but also makes sensors, converters and power steering components.
Faurecia said Monday that the combination of the two companies would create the seventh-largest automotive supplier. However, based on Automotive News’ calculations of 2020 revenues, Hyundai Mobis, with $25.1 billion in sales in 2020, would remain in seventh position.
Hella traces its roots to 1889. The Hueck family has controlled Hella since 1923 and took the company public in 2014. It sold its front-camera software business to Volkswagen Group in February 2021.
Faurecia began life in 1997 as the product of a friendly takeover of seating specialist Bertrand Faure by Peugeot SA’s equipment arm, ECIA.
PSA Group divested its holdings in Faurecia as part of the agreement with Fiat Chrysler Automobiles that created Stellantis in January 2021.
At the time, Koller suggested that Faurecia was looking for M&A targets to help reinforce its business as a standalone company. “The upcoming change in Faurecia’s shareholding structure will offer new opportunities for value creation,” he told analysts in February 2021.
Those opportunities included the possibility of additional M&A activity, Koller said. Faurecia had committed 60 percent of its net cash flow to deleveraging and potential “bolt on” activity, meaning acquisitions or collaborations.
