Delphi Automotive has announced that it has entered into exclusive negotiations and has made a binding offer to acquire FCI Group’s (“FCI”) Motorised Vehicles Division (“MVL”). MVL is a leading global manufacturer of automotive connection systems with a focus on high-value, leading technology applications. The transaction is valued at €765 million on a cash and debt-free basis (approximately $972 million at current exchange rates) and is expected to close by year-end 2012, subject to acceptance of the offer and regulatory approvals. Delphi expects the transaction to be $0.24 accretive to 2013 earnings per share, excluding acquisition-related costs.
MVL, which will become part of Delphi’s Electrical / Electronic Architecture segment (“E/EA”), is the leading global provider of high-performance interconnection systems for a wide range of applications. These include connectors for the high-growth safety restraint systems (“SRS”) market, powertrain and electrical vehicles. MVL had revenue of €692 million in the year ended December 31, 2011, and is owned by affiliates of Bain Capital.
“This transaction will solidify Delphi’s position as one of the premier global automotive suppliers and will create significant shareholder value,” said Rodney O'Neal, chief executive officer and president of Delphi. “The addition of MVL strengthens the high growth connector product portfolio of our E/EA segment, broadens our mix of global customers and furthers our strategy of providing our customers with solutions to address the trends of Safe, Green and Connected. As a result, following the acquisition, we will be better positioned to further drive growth in electronic content in motor vehicles. As MVL’s largest customer, we respect their accomplishments and share a commitment to developing innovative products and delivering solutions that meet a wide range of needs and applications.”
Liam Butterworth, president of MVL, stated, “The opportunity to join a global organisation like Delphi, with an outstanding reputation in the connector and electronic architecture industries, will better position us to pursue future growth opportunities. By leveraging both parties’ strong innovation and R&D capabilities, we will continue to provide the market with the highest quality innovative interconnect systems, while exceeding the expectations of customers worldwide.”
The transaction will further strengthen E/EA’s position as a market leader in the global automotive connectors segment and accelerate its entry into the high-growth SRS segment. In addition, the transaction will greatly enhance Delphi’s portfolio of connectors for hybrid and electric vehicles.
The transaction will broaden Delphi’s relationships with leading automotive OEMs across the globe, including Chrysler, Daimler, Ford, General Motors, Hyundai, PSA Peugeot-Citroën, Renault Nissan and Volkswagen Group.
MVL’s robust product portfolio and global operations, including its significant manufacturing and engineering presence in China, India and Korea, will further strengthen Delphi’s position in the high-growth Asian market.
Delphi expects total annual full run-rate pre-tax synergies of $80 million, to be fully achieved in 2015. The synergies are expected to come from procurement, product development and supply chain. Building on a strong base product portfolio and customer positions, the combined businesses will expand Delphi’s EBITDA margins. Delphi expects 2013 EPS accretion to be $0.24, excluding acquisition-related costs and including approximately $0.12 amortization of acquired intangible assets.
Completion of the transaction is subject to customary regulatory consents and approvals and acceptance of the binding offer by FCI, which can only occur after consultation with certain of MVL’s works councils. Delphi intends to finance the transaction through a combination of cash on hand and debt. Additionally, the transaction is expected to have no impact on the previously announced $300 million share repurchase program, which will be executed through 2012 or until the $300 million has been utilised.
Deutsche Bank Securities Inc. is serving as Delphi’s financial advisor, and Cleary Gottlieb Steen & Hamilton LLP is serving as its legal counsel. N M Rothschild & Sons Limited and Goldman Sachs are serving as FCI’s financial advisors, and Latham & Watkins LLP is serving as its legal counsel.
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