M&A Update | Automotive Supplier H2-2017

Continuing the trend of automotive supplier consolidation seen during the second half of 2017 (H2-2017), as seen in Tables 8 and 9, Dana Inc. (NYSE:DAN) and British supplier GKN plc (LSE:GKN) announced on March 9, 2018 a $6.1 billion deal that would merge GKN's automotive business into Dana. This combination would allow Dana and GKN to leapfrog larger automotive driveline competitors Borg-Warner, Continental and ZF Friedrichshafen, creating the largest driveline supplier in the world at $14.2 billion in revenue. The transaction is valued at 8.1x adjusted EBITDA, which is slightly higher than the 7.4x average EV/EBITDA multiple in the publicly traded powertrain segment below.

Table 2: Comparable public company analysis – Powertrain

Enterprise

LTM

LTM

LTM Gross Profit EBITDA Margin

Enterprise Value / LTM

3-Year Hist. Revenue CAGR

Total Debt

EBITDA Margin

($ in millions)

Value

Revenue Gross Profit

Company Name

Exchange

Headquarters

Revenue EBITDA EBITDA

1,048 1,630

18% 22% 41% 15% 16% 17% 27% 16% 27% 22% 18% -

17% 17% 14% 11%

0.8x 1.2x 1.3x 0.7x 0.9x 0.8x 0.8x 0.8x 0.4x 1.5x 0.9x 0.8x

5.7x 8.0x 8.5x 7.5x 6.7x 5.5x 8.8x 5.2x 6.8x

3.8x 1.3x 2.4x 2.5x 1.6x 1.3x 2.6x 1.3x 2.0x 2.3x 2.1x 2.1x

19.2%

1,144 2,120 1,831 1,076

5,278

6,266 9,799 4,472 7,209

American Axle & Manufacturing Holdings, Inc. NYSE:AXL

United States United States

BorgWarner Inc.

NYSE: BWA

12,248

5.7%

CIE Automotive, S.A. Dana Incorporated

BME:CIE

Spain

5,935 5,286

645 787

19.0%

NYSE:DAN LSE:GKN

United States United Kingdom

2.9%

GKN plc

11,284

13,072

-

1,112

9%

11.5% 16.2% 9.9% 5.0% 3.4% -0.8% 9.2% 7.8%

Linamar Corporation

TSX:LNR

Canada

4,397 1,602

5,220 2,025

861 345

819 190

16%

Modine Manufacturing Company

NYSE:MOD

United States

9%

Schaeffler AG Tenneco Inc.

DB:SHA

Germany

14,014

16,836

4,618 1,503

2,827

17%

NYSE:TEN NYSE:TKR

United States United States

4,045 4,369 6,846 5,282

9,274 3,004 7,718 6,738

710 427

8%

The Timken Company

810

14% 13% 14%

11.3x

$

$

$

1,590 1,144

$

1,019

7.4x 7.2x

Mean Median

803

Table 3: Comparable public company analysis – Automotive components

Enterprise

Enterprise Value / LTM

3-Year Hist. Revenue CAGR

LTM

LTM

LTM Gross Profit

Total Debt

EBITDA Margin

($ in millions)

Company Name

Exchange

Headquarters

Value

Revenue Gross Profit EBITDA Margin

Revenue EBITDA EBITDA

Autoliv, Inc.

NYSE:ALV

Sweden

13,578

10,383

2,149 1,398

1,279

21% 48% 26% 19% 34% 39% 15% 26% 24% 19% 25% 24% 9%

12% 18% 15% 12% 17% 35% 10% 14% 10% 14% 11% 15% 14%

1.3x 1.9x 1.1x 0.7x 2.4x 3.2x 0.6x 1.9x 1.3x 0.8x 0.8x 1.4x 1.3x

10.2x 9.6x 7.4x 5.9x 9.0x 5.5x 8.9x 6.2x 7.8x 9.0x 8.9x 15.9x 12.7x

1.0x 1.3x 0.6x 1.7x 1.6x 0.1x 0.9x 9.5x 7.0x 2.7x 0.0x 2.4x 1.3x

4.0%

Brembo S.p.A.

BIT:BRE DB:CON

Italy

5,514

2,893

525

11.4% 8.4% 3.7% 1.3% 9.3% 4.2% 8.3% 7.5% -5.4% 13.4%

Continental Aktiengesellschaft Cooper-Standard Holdings Inc. Donaldson Company, Inc.

Germany

57,840

52,845

13,658

7,927

NYSE:CPS NYSE:DCI

United States United States

2,420 6,159 5,657

3,618 2,578 1,795

671 884 695

446 431 623

Gentex Corporation

NasdaqGS:GNTX United States

Magna International Inc.

TSX:MG

Canada

22,010

38,946

5,688

4,020

NN, Inc.

NasdaqGS: NNBR United States

1,154 1,225

620 935

161

86 98

Superior Industries International, Inc. The Goodyear Tire & Rubber Company

NYSE:SUP

United States

83

NasdaqGS:GT United States

11,773 18,064 13,218

15,377 22,274 13,842

3,698 4,171 3,023 1,398

2,137 2,345 1,811

Valeo SA

ENXTPA:FR

France

Mean Median

$

$

$

$

6.0% 7.5%

6,159

3,618

623

Table 4: Comparable public company analysis – Body and structural

LTM

LTM Gross Profit

Enterprise Value / LTM

Total Debt

Enterprise

LTM

3-Year Hist. Revenue CAGR

EBITDA Margin

($ in millions)

Revenue EBITDA EBITDA

Company Name

Exchange

Headquarters

Value

Revenue Gross Profit EBITDA Margin

BME:GEST TSX:MRE

Spain

7,651 1,472

10,002

4,130

989 308

41% 17% 11% 12% 20% 15%

10% 10%

0.8x 0.5x 0.3x 0.4x 0.5x 0.5x

7.2x 5.2x 5.0x 5.0x 5.6x 5.1x

3.5x 1.7x 2.5x 1.9x 2.4x 2.2x

9.6% 0.8% 3.4% 2.6% 4.1% 3.0%

Gestamp Automoción, S.A. Martinrea International Inc. Shiloh Industries, Inc. Tower International, Inc.

Canada

2,943 1,042 1,988 3,994 2,465

498 118 245

NasdaqGS: SHLO United States NYSE:TOWR United States

363 813

73

7%

203 393 256

10%

$

2,575 1,143

$

$

1,248

$

9%

Mean Median

371

10%

Table 5: Comparable public company analysis – Electronics

Total Debt

LTM

LTM

LTM Gross Profit

Enterprise

Enterprise Value / LTM

3-Year Hist. Revenue CAGR

EBITDA Margin

($ in millions)

Revenue EBITDA EBITDA

Revenue Gross Profit EBITDA Margin

Exchange

Headquarters United Kingdom

Value

Company Name

2,623 2,274

2,091 1,048

20% 28% 14% 31% 23% 24%

16% 13%

2.1x 1.0x 1.1x 2.4x 1.6x 1.6x

10.6x

2.0x 1.2x 1.3x 2.7x 1.8x 1.7x

-6.0% 7.5% 6.8% 5.0% 3.3% 5.9%

12,884

Aptiv PLC

NYSE:APTV

26,617

HELLA GmbH & Co. KGaA

DB:HLE

Germany

7,935 3,588 7,817

8,145 3,146 3,304 6,870 5,725

7.0x

Visteon Corporation WABCO Holdings Inc.

NasdaqGS:VC United States

436

293 526 989 787

9%

11.0x 15.4x 11.0x 10.8x

NYSE:WBC

Belgium

1,028 1,590 1,651

16% 14% 14%

$

11,489

$

$

$

Median Mean

7,876

Table 6: Comparable public company analysis – Interior

Total Debt

Enterprise

LTM

LTM

LTM Gross Profit

Enterprise Value / LTM

3-Year Hist. Revenue CAGR

EBITDA Margin

($ in millions)

Revenue EBITDA EBITDA

Revenue Gross Profit EBITDA Margin

Company Name

Exchange

Headquarters

Value

Adient plc

NYSE:ADNT

Ireland

9,244

16,391 24,234

1,315 2,540

1,073 1,909

8%

7% 8%

0.6x 0.5x 1.3x 0.6x 0.7x 0.6x

6.0x 6.6x 8.1x 6.3x 6.7x 6.4x

3.3x 1.3x 1.0x 0.9x 1.6x 1.1x

0.0% 6.1% 6.7% 4.9% 4.4% 5.5%

Faurecia S.A.

ENXTPA:EO France

12,134

10% 32% 12% 15% 11%

Gentherm Incorporated

NasdaqGS:THRM United States

1,258

986

311

143

15% 10% 10%

Lear Corporation

NYSE:LEA

United States

13,240

20,467 15,519 18,429

2,365 1,633 1,840

2,103 1,307 1,491

$

8,969

$

$

$

Mean Median

10,689

9%

Source: Baker Tilly Capital Insights and Capital IQ (as of March 9, 2018)

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