Price Waterhouse: Auto Industry Mergers and Acuisitions Up with Changing OEM Activity
1 July 1997
Original Equipment Manufacturer (OEM) Demands Fuel M&A Activity in the Automotive Industry
Price Waterhouse LLP's U.S. Automotive Supplier Industry
Merger and Acquisition Review Reveals:
- 109 M&A transactions completed in 1996 -- a 17% increase over those
recorded in 1995.
- A disclosed value of the transactions in 1996 of $11.1 billion.
- 48 cross-border transactions in 1996 with a disclosed value of
$6.2 billion.
NEW YORK, July 1 -- The continuing consolidation among
automotive component suppliers resulting from changing OEM requirements is the
key factor behind the significant increase in automotive industry mergers and
acquisitions activity in 1996, according to a U.S. Automotive Supplier
Industry Merger and Acquisition Review published by Price Waterhouse LLP.
Compiled by the specialist automotive team of Price Waterhouse's Corporate
Finance practice, the review includes publicly available information on
transactions in the supplier industry involving U.S. companies as either
acquirer, divestor or target and covers the period January 1996 through
December 1996. The study reveals that:
-- There were 109 transactions in 1996 with a disclosed value of
$11.1 billion compared to 93 transactions in 1995 with a disclosed
value of $4.5 billion.
-- Larger suppliers continue to complete multiple off-shore and domestic
acquisitions to position themselves as the main suppliers of high
quality systems/modules for OEMs, such as Ford, General Motors,
Chrysler and Toyota.
-- Smaller/weaker suppliers are seeking strategic partners to enable them
to compete in the new, consolidating marketplace. In some cases,
companies are exiting the business altogether.
-- Major automotive suppliers that completed multiple domestic and
offshore acquisitions in 1996 include Breed Technologies, Inc., TRW,
AlliedSignal Automotive, UT Automotive, Magna International, Dana
Corporation, Tower Automotive, Echlin, Inc., and Lear Corporation.
-- Significant cross-border activity occurred in 1996 with 28 deals in the
automotive supplier sector involving U.S. and European entities. This
high level of cross-border activity reflects increasing globalization;
the growing links between European and U.S. suppliers; and the ongoing
consolidation of the U.S. and European markets.
-- Analysts and industry observers agree that if industry trends in sales
and cost-cutting continue, comparable merger and acquisition volume in
the automotive supplier base can be expected in 1997.
The Price Waterhouse Corporate Finance practice advises and supports its
clients in the development of their businesses. Services include: mergers
and acquisitions; strategic advice; joint ventures and strategic alliances;
management buy-outs and buy-ins; valuations; shareholder value studies;
financings; and initial public offering advisory. In 1996, Price Waterhouse
Corporate Finance advised on 205 completed transactions with a total value of
$9.0 billion.
For nearly 150 years, Price Waterhouse has been helping the world's
leading companies solve complex business problems. Today, through a worldwide
network comprising 56,000 professionals, Price Waterhouse assists clients in
effecting organizational and strategic change; using information technology
for competitive advantage; complying with statutory audit and tax
requirements; and implementing strategies to improve business performance and
increase shareholder value. Price Waterhouse LLP, with more than 15,000 men
and women in principle cities throughout the United States, is a vital part of
the worldwide Price Waterhouse organization.
SOURCE Price Waterhouse LLP