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The global auto parts supplier industry will return to the M&A market
The strong first-quarter performance of suppliers underscores that restructuring has not only boosted their sales, but also reduced costs, increased profit margins and improved their balance sheets.
Bankers say the revived auto market is pushing renewed suppliers to seek technology, growth and global scale, and trading activity in the auto parts industry will rise.
In addition, the capital market is more acceptable for bond and stock issuance, and component suppliers are expected to return to the M&A market. In the previous period, due to the difficult situation of automakers, the M&A activities of suppliers were suppressed.
Stephen Worth of Evercore Partners said: "The past decade has been a decade of lost, and the relationship between automakers and suppliers has become increasingly difficult, making integration more difficult."
“The transformation of US automakers has changed this situation, and manufacturers are accelerating the deployment of global architecture and will re-launch global sourcing.”
Ford Motor has cut its global production suppliers from 3,300 in 2004 to 1,500 at the end of last year, and is working hard to reduce it to 750. International “marriage” – such as Fiat's gradual increase in holdings of Chrysler – means that automakers are increasingly looking for larger global suppliers.
John Hoffecker, head of automotive business at AlixPartners, said, “The best option for suppliers is to gain greater market share in the strongest areas,” rather than forming scales as they have in the past. Growing corporate groups.
Johnson Controls has been building its own battery business and acquired Keiper and C Rob Hammerstein of the seat system company Germany last year.
Visteon, which just got out of bankruptcy in October, predicted last week that it would increase its M&A efforts and said it might act on the temperature control business. Don Walker, chief executive of Magna International, said he felt it would be "right" to use the company's cash for the acquisition. The consultant pointed out that the crisis has caused many companies to fall into the hands of banks or miserable investors who will soon seek to sell them.
Delphi will seek an initial public offering (IPO) this year, which is owned by hedge funds headed by Elliott Management and Silver Point Capital. In addition, investor Carl Icahn is currently researching the sale of Federal-Mogul.
Chinese companies are also expected to play a role in this because Chinese automakers want to acquire overseas technology. A banker cited China Pacific Century Motors' acquisition of General Motors' turnaround system business Nexteer as saying that "China's interest is shifting from automakers to parts companies."
Bankers say large companies are trying to cut more of the lower-than-popular businesses and focus on high-tech parts and growth. In addition, they added that regional companies with relatively high costs will find it more difficult to compete.