Hella and Faurecia agree on a merger: Partnership opens up additional growth potential

On August 14, 2021, the lighting and electronics specialist HELLA and the French automotive supplier Faurecia signed an agreement on the merger of the two companies.

 

The key points in short

• Faurecia acquires the 60 percent share package of HELLA's pool shareholders and announces takeover offer to acquire the remaining HELLA shares at an offer price of EUR 60
• The merger creates the world's seventh-largest automotive supplier and a global market leader in high-growth technology fields
• HELLA divisions can continue to invest significantly in research and development and operate with a high level of operational responsibility
• HELLA's Management Board, Shareholder Committee and Supervisory Board welcome the transaction

 

Faurecia takes over the 60 percent share package

In the context of the merger of the two companies, Faurecia takes over the 60 percent share package of the HELLA pool shareholders. Faurecia has also announced a voluntary public takeover offer to acquire the remaining HELLA shares at an offer price of € 60 (gross offer price of € 60.96 including the expected dividend of € 0.96 per HELLA share). The closing of the transaction is subject to regulatory approvals and is expected to occur in early 2022. HELLA's current pool shareholders will retain a stake in the listed parent company via a reverse participation of up to nine percent and will thus continue to closely accompany HELLA in the future. Against this background, a pool representative is also to join Faurecia's Board of Directors.

 

By merging their activities, HELLA and Faurecia will become the seventh largest automotive supplier worldwide. This opens up significant potential for further profitable growth. Both companies are already global market leaders in their respective fields. By combining their specific strengths, HELLA and Faurecia aim to further expand their market position, particularly in key growth areas such as electromobility, autonomous driving and vehicle interior design, and to additionally strengthen their position with regard to customers and in the regions.

 

"Faurecia and HELLA are a very good match. This is particularly true with regard to product range and market coverage. In addition, both partners attach great importance to consistent customer orientation, operational excellence and technological leadership," says HELLA CEO Dr. Rolf Breidenbach. "From this perspective, it is obvious that we join forces to jointly drive the future of mobility at the forefront. With Faurecia at our side, we will have even more opportunities in this respect than ever before."

 

"As family shareholders, we are fulfilling our corporate responsibility for HELLA by placing HELLA in new hands early on before our family pool agreement expires, thereby further improving its strategic positioning - for the benefit of HELLA and its 36,000 employees. At the same time, as shareholders of Faurecia, the family will continue to accompany the development of this leading European company," says Dr. Jürgen Behrend, head of the pool of family shareholders. "With Faurecia as the new majority owner, HELLA will be able to play to its strengths even more effectively. The competences of both companies complement each other perfectly. We have secured long-term commitments for the sites and investments in the fields of the future. HELLA thus has the ideal prerequisites to continue to be successful in the long term."

 

"This merger is a unique opportunity to create a global leader in automotive technologies. I am convinced that Faurecia and HELLA are an excellent fit because we share a common vision, values and culture," says Faurecia CEO Patrick Koller. "Our two highly-skilled teams have been working closely together since late 2018 and have demonstrated their ability to collaborate. Together, we will have the decisive edge to benefit from the strategic drivers that are transforming the automotive industry. By combining our product portfolios and market position, we will accelerate our profitable growth through innovation, a broader electronics and software offering, and expanded execution capabilities. Our financial profile will remain solid, we will maintain a focus on sustainable cash generation and reducing the company's debt. In this respect, I am confident that the acquisition will create sustainable value for the customers, employees and shareholders of Faurecia as well as HELLA."

 

The merger creates the world's seventh-largest automotive supplier and a global market leader in high-growth technology fields

The merger of HELLA and Faurecia creates a global technology leader that covers both a broad customer spectrum and key automotive fields of the future. For example, Faurecia's good market access in China and Japan as well as to US car manufacturers opens up additional growth potential for the HELLA divisions. Further potential lies primarily in the areas of emission-free mobility, driver assistance systems and automated driving, vehicle interiors of the future, and lifecycle value management (including aftermarket and special applications). In these fields in particular, the two companies have complementary business activities that together offer a powerful portfolio with broad market access.

 

For example, the transaction will create a global provider for electromobility with a comprehensive range of services. HELLA is contributing its high-performance portfolio in the areas of battery and steering electronics, sensors and actuators, while Faurecia is contributing sophisticated hydrogen solutions and storage systems. In terms of solutions for driver assistance systems and autonomous driving, the merger will also create a global technology leader with a broad range of products and systems. To this end, Faurecia is contributing the expertise of its subsidiary Faurecia Clarion Electronics, among others.

 

Based on the close development partnership between the two companies regarding innovative lighting solutions for vehicle interiors, which has been in place since 2018, these activities will be further accelerated by incorporating Faurecia's expertise in seats and interior equipment as well as HELLA's expertise in interior lighting, sensors and electronics for vehicle access systems. Further advantages result from combining HELLA's aftermarket activities and its business with manufacturers of special vehicles with Faurecia's lifecycle value management activities.

 

HELLA divisions can continue to invest significantly in research and development and operate with a high level of operational responsibility

In order to make the best possible use of the potential of both partners, the HELLA divisions are to be integrated into the Faurecia Group while retaining a high level of operational responsibility. At the same time, the merger agreement between the two companies provides for the continuation of HELLA's multi-pillar strategy and consistent investments in the development of automotive technologies of the future in order to secure the company's position as technology and market leader. HELLA's established cooperation network consisting of numerous joint ventures and strategic partnerships will also be further strengthened. Joint committees will monitor implementation and ensure compliance with the merger agreement.

 

The agreement also includes far-reaching commitments to HELLA employees. Thus, all company agreements and collective agreements will remain in force. There should also be no changes to the structure of the works council. Employee co-determination on the Supervisory Board is also to be retained. In accordance with the agreement between the two companies, HELLA's headquarters in Lippstadt will also remain a central location in the joint group.

 

"The agreements reached with Faurecia are an expression of the fact that there is a great deal of agreement between the two partners with regard to general objectives and fundamental corporate values. In my view, these are important prerequisites for continuing our successful course," says HELLA CEO Dr. Rolf Breidenbach. "From this point of view, I am looking forward to the partnership with Faurecia. Together, we will be able to generate even more value for our stakeholders."

 

HELLA's Management Board, Shareholder Committee and Supervisory Board welcome the transaction

In the course of the takeover of the block of shares held by HELLA pool shareholders amounting to 60 percent of HELLA shares and the merger agreement, Faurecia has announced a voluntary public takeover offer to acquire the remaining shares in free float. The offer price amounts to 60 euros per HELLA share. The gross offer price will be € 60.96 per HELLA share, which corresponds to the share purchase price agreed with the pool shareholders and a total value of all HELLA shares of approximately € 6.8 billion, representing a premium of 33 percent to the closing price of HELLA GmbH & Co KGaA on 26 April 2021 and of 24 percent based on the weighted average price of HELLA shares over the last three months up to 26 April 2021.

 

Subject to the review of the offer document to be published by Faurecia, the Management Board, the Shareholders' Committee and the Supervisory Board of HELLA welcome the merger and support the takeover offer.

 

The offer document will be published by Faurecia in accordance with the requirements of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, WpÜG) after approval by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin), probably in mid-September. The Management Board and the Supervisory Board of HELLA will carefully review the offer document and issue a reasoned statement in accordance with section 27 WpÜG. From today's perspective, HELLA's Management Board and Supervisory Board expect that the boards will recommend to the shareholders that they accept the offer. No minimum acceptance level is envisaged for the takeover offer. The offer document and other communications relating to the offer will be made available on the internet. The exact deadline for acceptance of the offer will also be published there.